Counteroffers and staying sane
The seller receives the buyer's initial offer to purchase their home.The two parties enter into back and forth negotiations, each side making counteroffers against the other side's offer. Ideally, this process will not have too many rounds (2-3 is good) and remain amicable. The best result is when a consensus is reached and both sides feel like they got a fair deal.
It's a game of give and take (and maybe even some bluffing) and can be the most nerve wracking part of the home buying (and selling) process. You are so close to getting your dream home and your anxiety levels can sky rocket. If the negotiations are less than smooth, it is important to try to stay calm. Working with a good realtor will help keep you sane and hopefully get the best deal under the prevailing market conditions. Go for a hike on Mt. Rainier, down a couple of fine Seattle microbrews, rent a movie, or all three of them!
When the seller comes back with a counteroffer to your initial offer, they will probably cross out the offer price you entered and write down a new price somewhere between your offer and the actual listing price. They may also come back with some other comments such as "washer and dryer not included".
The modified sales contract will be faxed back to your team, i.e. your Seattle agent, who will review it with you. The dance can end here or go on for another couple of rounds. Avoid nit-picking over minor issues, focus on the major items. Also, avoid protracted negotiations. If the seller gets a better offer from a less demanding buyer, you may not hear back from the seller again.
All things going well, you and the seller will come to an amicable agreement. Then as per the inspection contingency clause, you will arrange a time and date for a professional inspection of the property. The status of the listing will be updated to "pending inspection".
Home inspections
The inspection will look at structural, electrical and plumbing elements of the home and also a pest inspection. You the buyer, pays for the inspection. It is highly adviable that you do not skimp on this step. Most of us know little about plumbing, foundations and electrical circuits. You want to avoid buying a lemon of a house. Even if the home is brand new construction and has a 5 year warranty, have it inspected. Building contractors going belly-up is not uncommon and poor quality new construction does exist.
If you have not purchased a home before, you are probably not going to know too many home inspectors. Your agent will be able to recommend an inspector for you but you are not obligated to use them. Ask your friends or work colleagues who they have used.
If time allows, it is a good idea to screen the inspector in advance by asking then some questions over the phone. You will not have much time to look for an inspector after reaching agreement with the seller, so start looking early if you wish to screen inspectors.
• Are they certified by, for example, The American Society of Home Inspectors?
• How many years of experience do they have?
• What types of properties have they inspected?
• Is this their full time job?
• What company do they work with? Then check out that company with the Better Business Bureau.
• Will they provide a written report with color photos of potential problems (unless you are willing to go in the crawl space and attic as well)?
• Are they willing to get up on the roof, not just look at it from the ground?
• Are they willing to go into the crawl space not just point a torch in the hatch.
• Willing to provide references
Ideally, try to end up with an inspector that is known by Seattle agents as a "deal breaker". In other words, an inspector who will find all the bad stuff. You should attend the inspection, as should your agent. Although the inspector will put together a report for you, it is a good idea to walk around with the inspector during the inspection. You will learn a lot about homes and, more importantly, about your potential new home.
Once the inspection has been completed, you have three options.
1. decide to withdraw your offer and ask for your escrow money back (you do not have to tell the seller why)
2. accept the offer as-is and move forward with the agreement
3. make a counteroffer.
Say for example, the seller's roof needs replacing or the basement floods in winter, then you could request that these items be repaired or that the listing price be lowered to cover future repair costs. Many times the home will require lesser repairs but you will be trying to get the price down by leveraging the information gained from your inspection and any disclosures in the Sellers Disclosure Statement (Form-17) provided by the seller. It is usually better to have the seller do the repairs before closing (assuming it will not delay the closing date), because if the seller discovers that the repairs are bigger and more expensive than expected, the seller will have to pay those extra costs, not you!
And finally……we reach mutual acceptance / agreement!
With all the back and forth movement of offers there needs to be a way of determining what has been rejected, accepted or counter-offered. Your objective is to reach mutual acceptance. This means that both sides have signed the contract and wish to move on to closing.
The bullet points below will help explain what can be a confusing process. Don't worry, your agent will be taking care of all document movements, but you must make the actual decisions (do NOT let your agent coerce you into a decison that you are not comfortable with).
• A buyer's initial offer to purchase becomes invalid if the seller does not respond within the required deadline listed on the sales contract (offer).
• If the seller signs the buyer's offer as-is and the agreement is then delivered back to the buyer within the required deadline, the offer is considered accepted by the seller.
• However, if the seller comes back with a counter offer, the buyer's offer is no longer valid. It is important to remember that a counteroffer is NOT an acceptance. In addition, a counteroffer invalidates the latest offer from the other side.
• If the buyer does not respond within the required deadline, the counteroffer will expire.
• However, if the buyer then signs the counteroffer from the seller, and the offer is then delivered back over to the seller within the deadline, the offer is deemed accepted.
Remember both you, the buyer, and the seller have the right not to accept an offer. However, if the offer meets your expectations, grab it!
Continue to Buyer's step 6. Closing and Escrow
Return to Buyer's step 4. My dream home
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