What is a counteroffer?
A counteroffer is a new offer that is made in response to a previous offer that doesn’t meet the terms/requirements of the one the offer is being made to. Clear as mud, right? In a simpler term, it is a negotiation of terms between the buyer and seller.
In most cases this example is how it starts to play out, the buyer makes an offer to purchase a property from the seller. However, the seller wants to sell the property but doesn’t agree to all the terms laid out in the offer by the buyer, so the seller makes an offer back to the buyer – this is called a counteroffer.
What happens to the previous offer once a counteroffer is submitted?
When a counteroffer is made the previous offer is rejected and a new offer is created. Using the same example as above, the buyer is no longer obligated by the original offer terms to purchase the property from the seller once the new offer is created. Since the seller has technically rejected the first offer and made a new offer, the buyer now in turn has the option to accept, reject or counter the counteroffer.
Can you counter a counteroffer? If so, how many times?
If the buyer chooses to counter back, this in a sense becomes a counter-counteroffer; however, this is not a formal term that is used, so it is referred to just as another counteroffer. The back and forth process of offers and counteroffers can go on until either 1) an agreement to terms is accepted by both the buyer and the seller, 2) the last/current offer that is made is rejected by the opposite party with no new offer being made, or 3) the last party to make an offer withdraws the offer prior to its acceptance or rejection by the opposite party.
As negotiations go back and forth, it is always best to make sure to thoroughly review the new offer each and every time prior to making a decision on how to respond. There are many terms laid out in a contract, and even though it doesn’t always happen, reaching acceptance between all parties on all terms is the goal during this stage of a real estate transaction.
For additional resources on counteroffers, see the sites below for additional details.
Karen Highland’s “First Rule of Negotiating – Don’t Let Emotions Rule”
John Cunningham’s “Counteroffer – Negotiating Real Estate”