Offers to Purchase are frequently presented for a lower price than a seller wants. If the offer is low some sellers first reactions are often to take offense, but most buyers initially offer less than what theyll ultimately pay. And in NC a verbal Offer is nothing; NC Real Estate Agents are only required by law to present written offers to their seller clients.
So when a buyer has made the effort to put it on paper they probably truly want to buy the property. Therefore it is smart and good business for a seller to take a breath, and negotiate!
A counteroffer in a real estate transaction occurs when a seller or buyer responds to an initial offer with modifications to the terms rather than accepting it outright. This response rejects the original Offer and presents new terms for the other party to consider.
Here in the Outer Banks market most sellers and buyers are from out-of-town, so after initial offer is presented to the seller, the parties usually negotiate verbally to strike agreeable price and terms. Then we revise the Offer on paper and, when all parties (all buyers and all sellers party to the transaction) have signed, that becomes the Contract.
How It Works:
Buyers Offer - A buyer submits an Offer to Purchase a property including price, representations, and terms Sellers Counteroffer - If the seller is not satisfied with the Offer but still wants to negotiate, they issue a Counteroffer. This may include: - A higher sale price
- More or different Earnest Money Deposit and/or Due Diligence Fee
- Adjusted contingencies (e.g., removing a closing costs request)
- A different closing date
- Exclusions or inclusions (appliances, fixtures, furnishings, etc.)
Buyers Response - The buyer can: - Accept the Counteroffer, making it a binding agreement
- Reject it and walk away
- Issue another Counteroffer with revised terms (the most common scenario)
Final Agreement or Termination -The process continues until both parties reach an agreement, or one party decides to end negotiations Key Points:
- A Counteroffer legally voids the previous Offer (but it does not kill the negotiations if either or both parties want to still work towards a deal)
- It creates a new Offer that the other party can accept, reject, or counter again
- Negotiation can go back and forth multiple times before an agreement is reached
- Until an Offer or Counteroffer is formally accepted and signed by all parties to become a Contract, either party can withdraw from negotiations
- Scenario: Sample Home Purchase Negotiation
Step 1: Buyers Initial Offer
- The buyer submits an Offer to Purchase a single-family house for $700,000.
- The Offer includes:
- A representation that the buyer will obtain financing
- A request for the seller to cover $5,000 in closing costs
- A closing date in 45 days
Step 2: Sellers Counteroffer
- The seller wants a higher price and better terms, so they reject the initial Offer and submit a Counteroffer:
- New price: $715,000 instead of $700,000
- No closing cost assistance
- Agrees to give the buyer time to apply and complete a loan process
- Moves the closing date from 45 to 35 days
- The buyer considers the Counteroffer and decides to negotiate further. They respond with:
- Price: $708,000 (meeting the seller halfway)
- Agrees to a 35-day closing
- Still requests closing cost assistance but in the lower amount of $3,000
Step 4: Seller Accepts
- The seller finds this compromise acceptable and signs a resubmitted/revised Offer to Purchase with these agreed price and terms
- The Contract is now legally binding, and the transaction moves forward
Key Takeaways
- Each Counteroffer rejects the previous Offer and creates a new one
- Negotiation can go back and forth until both parties agree or one walks away
- Terms beyond price (closing date, contingencies, concessions) are all negotiable
- The deal is finalized when both parties sign agreeing to the same terms