You submit an offer and you get countered? What does it mean?
Some buyers mistake a counter for a turn down or that it is etched in stone. It is not. It is an opportunity to 
open up the negotiations or it can be.
- Don't mistake a counter as a turn down
- Don't mistake a counter as an opportunity to go under what you originally offered!
- Don't mistake a counter as something you can sit on for several days - act on it if you want it!
- Don't over look what the bank is countering... read carefully
- If you want something - ask for it BEFORE you sign the contract - most effective if you ask you it during the negotiating period. Be reasonable in what you ask for.
- Keep in mind: Low ball offers just might get less than none consideration. Low balls stand out!! Most of the time the bank will never see them and you will be REJECTED in record time.
Example: If you ask for less than the asking price, plus you want 6% credit back for closing and you want termite inspection and you want termite section 1 repairs, and you want a 17 day inspection contingency and you want.... And you want...
- Take a look at what the counter is saying. Read carefully and be reasonable about what you are asking for.
Hint: The bank will usually counter an offer even if it for the asking price. They seem to find something on the original offer to counter so that it "fits" into what they want and into how they do business. So don't take it as a turn down.
- If you are bold enough to ask for a credit back be bold enough to understand that the bank will more than likely counter it if it is not a full offer and then ask for the counter. In other words offer that percentage over the asking price and then ask the credit back. Do not ask for a lower purchase price PLUS the % credit back! If you do, it will surely be countered.
- If you want the bank to pay for Termite Inspection and / OR Termite Section 1 repairs... say your prayers before you make the offer. The reason I say that is because the bank will usually counter any cost to them for inspections and for repairs. The bank is selling the property AS IS WHERE IS so they are usually not up to paying for any repairs. See AS IS, Where Is... Know WHAT IS before you offer!
Whereas it does not hurt to ask, just understand that it may be countered.
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I just had a deal blow up this week because the buyers wouldn't counter the bank's first response to their offer. Cmon!! I told the buyers agent up front to start out lower in the price because more than likely her clients were not going to want to accept the bank's addendum and could come up in price in their second offering. The second offering didn't come in. They could have countered and offered $5K more at least to see if they would budge. Unbelieveable!! I warned them from the get go what to expect!
Very well written blog!
A counter should be viewed as the starting of dialogue. This means that the bank is interested in making a deal happen, but they cannot give the asset away.
It is, however, important to try to get the listing agent to reveal how the asset manager thinks. I have asset managers that will not go through more than one round of countering before calling highest and best or take it or leave it. I have one asset manager who will usually counter back and forth until a deal is struck or the buyer gives up. She does not do it to be difficult, she does it because she has to have a certain number hit and will go around as many times as it takes to hopefully get a contract ratified.
Buyers and buyers agents also need to remember that there may be many layers of decision making. While some asset managers hold almost all authority, others may have to go up the food chain to get a certain offer accepted. I have found that in-house REO departments for big direct lenders typically have more authority than a loan servicer or REO outsourcing company who has to answer to the various investors who own the asset.
Jesse ~ thank you for that information - good input. There are so many lines to this REO business that it always helps to share the information to help agents and buyers understand the process. The more that truly understand how REOs work, the easier the job will be to get an accepted offer and CLOSE!
Thank you for the tips. There is no free lunch out there where the banks and REO's are concerned.
Robert ~ I totally agree. No free lunch, no starbucks, no nothing.