'Counter Offer' is explained in detail and with examples in the Real Estate edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.
Counter offers are those made by home sellers after buyers have turned in an official offer to buy the house. Usually, such counter offers spell out the terms with which the seller will accept the buyer’s official initial offer. Many different specifics can be addressed with a counter offer.
Some of these things include the consideration of a higher offering price, presenting a larger earnest money deposit, and modifying time frames for contingencies. Others counter offer elements might revolve around altering service providers, excluding any personal property from the home selling contract, or changing the possession date or closing date. A seller might also refuse to cover the costs of certain fees or reports.
Not only can sellers counter a buyer’s original offer, but buyers can similarly submit counter offers back to the seller on their counter offer. This is labeled a counter-counter offer. No limit to the actual numbers of counter offers which can be handed back and forth exists.
Counter offers are easily rejected. A number of purchase contracts for houses have places at the bottom of the contract for a seller to put his or her initials if the offer is being rejected. Many offers have time frames, or expiration dates, when the offer will be rejected if the seller has not responded. Sellers can simply write the word rejected over a contract’s face, then date and initial it to reject a counter offer.
In some states, sellers are allowed to come back with various counter offers at once. For example, in California, sellers are allowed to counter more than one offer at a time and every counter offer is permitted to be different. Should one of these buyers choose to affirm the counter offer of the seller in this scenario, the seller is not required to agree to the acceptance of the buyer. This can become confusing, so talking with real estate attorneys can be a good idea in these complicated cases.
Counter offers can similarly be accepted without difficulty by the buyer. All that a buyer needs to do to take the counter is to accept the offer and send it back to the entity to which it goes. Like with anything, timing is critical. Counter offers expire much as purchase offers do. This means that a seller could always elect to take an alternative offer while a buyer contemplates whether or not to sign off on the counter offer.
Even though many agents become discouraged at the mention of a counter offer being on the table, this should not be the case. Houses can be secured with new offers submitted even while a counter offer is out. In such a scenario, sellers commonly go ahead and take the second buyer offer. They then withdraw their counter offer from the first buyer. This is permissible and proper in every state.