Handling Counteroffers and Negotiation Stalemates

Article highlights:

• Understanding the dynamics of counteroffers
• Dealing with impasses and seller ultimatums
• Wrapping up negotiations and finalizing the contract

Negotiating the purchase of a home can sometimes be a tough pill to swallow. You may struggle and encounter some ill will if you incorrectly interpret a seller’s intentions when he makes a counteroffer.

Remember to keep a balanced frame of mind, and understand what motivates a seller. Savvy home buyers who understand the seller’s perspective can pay less or be granted more favorable terms in the purchase contract. Keep your emotions out of the contract negotiations. You may need to go back to the seller and ask for a closing-date extension or inspection repairs after reaching an agreement. In the end, goodwill pays dividends in these negotiations.

There are three outcomes when a purchase contract is drafted by the buyer and presented to the seller:

• The seller will accept the terms as initially presented and agree to the contract.
• The seller will counteroffer by modifying some or all of the terms.
• The seller will reject the terms and start over or walk away.

The counteroffer is the most common scenario in a contract. Many buyers and sellers like the back-and-forth of counteroffer negotiations. Be forewarned, though, that some peoples have a low threshold against prolonged counteroffering. A good rule of thumb is once you have gone back and forth, say, five times, you start bogging down the process. Both buyer and seller should develop a strategy for negotiating, before the contract is formally presented.

Dealing with stalemates

Counteroffers are like volleyball. Each time you serve a counteroffer back to the seller, you’ll gain a better idea of where he wants to go with price and terms. If a seller doesn’t budge much from his list price, it’s a sign that he’s digging in there his. Early signs of rigidity in counteroffers should tell you to buckle your seatbelt another notch, because the other side is not flexible.

Sometimes negotiations arrive at an impasse. The other side might call your bluff and say this is it, take it or leave it. If you developed a strategy, as mentioned earlier, you will know how to deal with the ultimatum. And, sorry to say it, but folks who throw out ultimatums also occasionally like to try and come back — after you’ve cried “uncle” — and ask for yet another bump. Say no, no, and no.

Inking the contract

Don’t be rushed through negotiations. Contract acceptance can take a matter of hours, and at worst, weeks. A good negotiation should take no more than two days, with five rounds of counteroffers. If either side delays their response to a counteroffer for more than a day, it’s a red flag, so give reasonable response deadlines to all your counteroffers.

When you and the seller accept the terms through the counteroffer process, it’s known as acceptance. Most states require all contracts and offers of price and other terms to be in writing. Each counteroffer should be presented in writing to the seller or their agent, but avoid verbally throwing out a number to the seller.

Next article: Withdrawing an Offer, the Easy Way >>