Pinyo Bhulipongsanon
Pinyo Bhulipongsanon
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How to Respond to a Soft Counter?

Here is the scenario. You submitted an offer to the Seller and they have no other (and stronger) offer. You waited a day and the listing agent contacted you back saying they just received another offer (Realtor Code of Ethics dictate that the listing agent is telling you the truth here), and that they want you to improve your offer.

Basically, they are not giving you any of the hard counter option of rejecting your initial offer, nor are they giving you their counteroffer. They are simply asking…can you do any better?

What do you do in this situation? The other offer does improve the Seller’s negotiating power by quite a bit. Here are 5 options that you can consider:

1. Say NO

You’re basically standing your ground and say you’re not planning to make any improvement to your offer. You are calling their bluff and hope the listing agent will do the right thing for the Seller and send you a real counteroffer. After all, it’s better for the Seller to have 2 competing Buyers in play rather than cutting you off all together.

The down side of this option is that they could just work with the other offer and put you aside for the time being.

2. Ask for a Counter Offer

This is similar to #1 above, but you’re being more friendly about it. You are saying that you want to work with the Seller, but need them to give you more information so that you can proceed.

3. Improve your Offer without an Escalation Clause

You’re doing what the Seller is asking you to do. You increase the offer price and/or reduce the amount of Seller’s Subsidy (closing credit) you’re asking the Seller to pay. Overall, you’re improving the Seller’s bottom line.

On the plus side, this does a better job of moving you closer toward a deal than the first two options. On the down side, you could be giving the Seller more than what they anticipated had they given you a counteroffer.

Also, the Seller could still go back to either Buyer to ask for more improvements.

4. Improve your Offer with an Escalation Clause

An Escalation Clause basically say that you will increase your offer price by X dollars as long as the Seller can produce a competing offer that triggers the increase. In addition to the escalation, you still have the option of improving your offer price and reducing subsidy requirement.

On the plus side, you’re laying down the ground rules and give yourself room to improve your offer in case your initial improvement is not enough. On the down side, you are giving away your position regarding how much you’re willing to go up. Also, some Seller doesn’t play by the rule and will simply counter your offer after they see your hand.

5. Give your Best and Highest

Best and Highest means you’re giving the Seller your final offer. This is truly the best you can do and you will not negotiate after this. As long as you’re honest with yourself, and the Seller plays by the rule, this strategy can work well because (1) you’re giving yourself the best chance at winning the contract and (2) you’re limiting yourself from overspending.

This strategy doesn’t work well when you aren’t completely honest with yourself, e.g., you beat yourself up for losing the contract and wish you had gone higher.

It also doesn’t work well when the Seller doesn’t play by the rule, e.g., they come back and ask for more.

In any case, when you’re a Buyer competing against one or more other Buyers for the same house, you’re in a weaker position. These are your options, but none of them are ideal. You have to be honest with yourself and ask how much you really want this house and if there is another house that you could buy instead. The answer will dictate what you need to do. As always, ask your Realtor for their guidance will give you the best outcome.

 

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