Counteroffers become part of the home buying and selling process after buyers make an offer on a house and the seller wants to change their deal to fit their sale goals better.

However, crafting an effective counteroffer takes skill and patience. If done poorly, the deal could fall through and leave everyone involved with a sour taste in their mouth.

But what if this is your first time selling a house or you’re a buyer who’s received a counteroffer and you’re confused about what to do next? Read on to learn the basics of counteroffers and how to craft one well.

What Is A Counteroffer In Real Estate?

In the home buying process, a counteroffer is an offer made in response to the original bid. When a seller gets an offer, they can choose to accept, reject or counter. In return, if the seller makes a counter, a buyer can also choose to accept, reject or counter it. Home sellers and buyers alike use this tactic to negotiate the best price and terms possible.

How Sellers Use Counteroffers

A seller can counter a buyer’s initial offer to increase the purchase price or earnest money deposit. Alternatively, they might counter to remove excessive buyer contingencies or shift the closing date to one that aligns with their timeline. In short, sellers can use counteroffers to modify the deal in their favor. 

Example Of A Seller Making A Counteroffer

For example, let’s say you’re the seller and you list your home for $220,000. However, a buyer offers you $200,000 instead. Maybe you're still interested in signing a contract with that buyer for your home. If so, you make a counteroffer of $210,000. At this point, the buyer may agree to that price, or the buyer may counter in response to your counteroffer. To make your offer stronger, you may want to provide comps, or comparable homes in the area, to show why that price is reasonable.

Sellers can also make counteroffers for other reasons, such as changing the closing date or contingency periods. Sellers will typically communicate the terms of the counteroffer through their listing agent or real estate agent, and may also put an expiration date on the counteroffer to speed along the home sale process.

What If Your Counteroffer Is Rejected?

If your counteroffer is rejected, don’t give up just yet – you still have two options: 1.) You can walk away from the deal; or 2.) create a different counteroffer. Typically, you have 1-3 days to prepare and send the new counteroffer.

Keep in mind that once you make a counteroffer, the original offer (or, in some cases, the original counteroffer) is off the table. If your counteroffer is rejected, it’s unlikely that you can go back and accept the previous offer.

It’s important to collaborate with your real estate agent to improve your offer by tailoring it to the other party’s motivations or weighing your pros and cons. It’s through this process that you’ll determine whether you should look for a new home or a new buyer.

How Buyers Use Counteroffers

A buyer can counter a seller’s counteroffer. There are no limits to the number of counters you can submit as a buyer.

First, home buyers create an offer that may be below the asking price when they want to negotiate the house’s price. The home seller may counter with a higher price than the buyer’s original offer, but lower than the original asking price. If the buyer thinks the price is still high, they could counter it.

Example Of A Buyer Making A Counteroffer

Let’s take a look at our previous example, only this time, you’re the buyer. A seller lists a home for $220,000, and you, the buyer, offer $200,000. If the seller comes back with a $210,000 counteroffer, you could accept the deal or counter $205,000.

In another scenario, you might counter because a home inspection reveals issues with a property, such as a cracked foundation. You can ask the seller to take the price down to $200,000 if you find out that fixing the foundation issues will cost $20,000.

Buyers resend the counteroffer terms to the home seller through their agent.

When Should You Accept A Seller’s Counteroffer?

Whether or not you accept a counteroffer depends on the market you’re in. It’s important to know where the housing market stands – whether your area is in a seller’s or buyer’s market – to get a head start on the competition.

Keep in mind that, if you’re countering, you’re not yet in a contract. The seller could get another (better) offer while you're still going back and forth. Both parties can work through negotiations until reaching an agreement, but it becomes legally binding when they sign the offer.

Consider the following things before you accept a seller’s counteroffer:

• Contingencies, which refer to requirements that must be met for the sale to go through
• Sale timeline
• Whether the seller’s counteroffer fits into your budget
• Whether you understand all parts of the offer

Once the counteroffer has been accepted, the buyer and seller will sign a contract. The buyer must secure financing, and the seller must complete any repairs stated in the agreement.

The Real Estate Agent’s Role In Counteroffers

Your real estate agent or REALTOR® can act as a go-between when dealing with counteroffers. Whether you’re a buyer or seller, they can help evaluate and draft counteroffers to ensure you get the best deal possible.

For example, your agent can tell you what purchase price to target based on nearby properties for sale (aka comps) and make recommendations on whether to accept, reject or counter offers accordingly. Ultimately, it’s their job to protect your best interests and keep counteroffers organized, compliant, and strategic.

Tips For Crafting A Great Counteroffer

On top of heeding your agent’s advice, follow these tips for crafting a great counteroffer:

• Respond quickly: A fast response keeps the momentum going and shows you’re serious about negotiating. If you keep the other party waiting, they may move on to other offers.
• Include an expiration date: Set a deadline for your counteroffer to encourage a timely response. That way, you’re not in limbo indefinitely.
• Know your bottom line: Before countering, get clear on the lowest price you’re willing to accept (as a seller) or the highest price you’re willing to offer (as a buyer).
• Remember everything is negotiable: In addition to negotiating the price, you can adjust closing costs, contingencies, closing dates, and other deal terms to your favor.
• Keep your emotions in check: Real estate is a business transaction. Don’t let emotional attachments derail the negotiation process or prevent you from coming to a mutually beneficial deal.
• Be willing to walk away: This helps you avoid a bad deal and strengthens your negotiation position by showing that you have other options.

Can Sellers Make Counteroffers With Multiple Buyers?

State laws vary on whether a seller can participate in more than one sale negotiation at a time. You should ask your real estate agent about the laws in your state. Sellers should not make multiple offers at once to benefit all parties involved.

When Should I Walk Away From A Real Estate Negotiation?

Buyers or sellers should not feel obligated to continue negotiations if they don’t feel comfortable with the sale price or with the terms of the counteroffer, such as waiving the home inspection contingency.

If you’re the buyer, look for the following red flags as potential signs to walk away from a real estate negotiation:

• The appraisal comes in lower than what you’ve offered.
• The home inspection reveals some major problems with the home.
• Someone else lays claim during a title search.
• It’ll cost a lot of money to insure.
• The deed restrictions are difficult for you to navigate.

Should I Counter A Lowball Offer?

When a seller gets an unreasonably low offer on the house (called “lowballing”), it’s generally a good idea to counter. For the seller, the act of countering tells the buyer that they’re still interested in selling to them if they improve the terms of their deal. However, there are many reasons a buyer may make a lowball offer, including:

• They don’t believe the house is worth the listing price.
• They’re uniformed about the market.
• They’re not serious about buying the home.
• They’re justifying the cost of repairs, renovations or improvements.
• They’re testing the seller.

The Bottom Line: How To Make A Successful Counteroffer

Ultimately, knowing how to craft effective counteroffers is a valuable skill that can save you a lot of money and headaches. But it requires strategy, market awareness, and clear communication. If you’re ever unsure about how to handle a counteroffer, revisit this guide.

Ready to buy your next home? Consider buying through Rocket Mortgage® and partnering with one of our certified real estate agents. They’ll guide you through the entire process to help ensure you get a good deal.