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Negotiating-making a counter offer on a home

Picture of a man with a speach bubble displaying the thoughts in his head. Hmmm How do I go about buying a home?

You may ask, how do I negotiate or make a counter offer with the seller of a house? I have compiled details of what makes a counter offer, what to expect, and how to negotiate to answer that question. 

What Makes a Counter Offer?
Counter offers are created by the seller of a home after a buyer has launched an offer to purchase the property. Counter offers are used to accept several of the terms and conditions of the second party's latest offer, while also modifying every other item. There is no limit to the number of times a seller and buyer can counter each other when negotiating with the seller on the price of the house. 

Counter offers will typically, state that a seller has accepted a buyer's offer subject to all of the following:

- Total consideration (a higher price) 
- Refusal to pay certain fees 
- Raising the size of the money deposit 
- Negotiating with the seller on which items in the house will be given to the buyer as part of the transaction
- Changing service providers 
- Changing possession date 
- Exempting your personal property from the agreement 
- Modifying the contingency time frames 

How Counter Offers are Accepted in Real Estate 

If a seller issues a counter offer, as a buyer, you can accept that counter and deliver it to the party meant to receive it. Note that time is a crucial factor in these negotiations as counter offers have expirations, meaning a seller can accept a fresh offer while a buyer is considering whether or not to sign the counter. If that is the case, a seller will withdraw that counter offer. In some cases, sellers whose home have been on the market for longer periods of time are more willing to accept buyers counter offers than a seller that has just put their house on the market. Remember that the goal of both parties is to reach and agree to an offer that they feel is right for the property. A seller will want to get as much money for their property as possible. A buyer is trying to get the lowest price possible. Negotiating through counter offers is the only way of coming to an agreeable price. 

Negotiating a Counter Offer with a Seller 

After doing your market research, you choose to make an initial offer of $275,000 on a house that is listed at $285,000. You also request that the seller pay's $6000 of your closing cost. You are seeking a closing date (say) 30 days from acceptance. You may have a contingency plan for the inspection of the home and financing. You are not asking for any additional personal property, save the home. And you put a two-day sign-back requirement in the agreement and present it to the seller. Below are several ways that the negotiations could play out: 

- Seller accepts the offer without conditions. 
- Seller makes a counter offer and adjusts most of your conditions. 
- Seller ignores your offer because it was far below the asking price. 

There isn't much to say regarding the first and third within the context of the article. But scenario two is linked. The seller decides to make a counter offer. 

Asking Price 

If the buyer offers less than the listed ask price for the home the seller may counter that offer price. This will mean the seller isn't willing to accept your original offer price. But if the seller proposes an offer that is below their original asking price, negotiations can go on. You can choose to go along with the seller's proposal, or you make another counter offer of your own. At this point you are in an asking price negotiation with the seller. Continue the process until you have reached an agreeable price for the home. Some sellers will negotiate the purchase price of the home and some will not. Some sellers may feel that their asking price is already fair based on the current values of similar homes recently sold in the area. 

Closing Date 

The seller may also alter the closing date. He or she can make the change alone or in line with the other changes to the sale price, and contingencies, etc. In the example above, you requested a closing date of 30 days from the acceptance. But the seller requires more time to move out. So he or she signs a counter offer to you proposing they need a 45-day period. You can choose whether or not to accept the proposal. In most cases, a buyer accepts a seller's changes to closing date, if it isn't a big difference. 

Contributions Towards Closing Costs 

A seller's counter offer may also address the contributions toward closing costs. In this example; you asked the seller to cover $6000 worth of the buyers closing costs. This is has been shown to be a common buyer’s market strategy, although it does not always work. A seller may simply decline, say no, or reduce the amount of the closing costs they are willing to pay. According to loan guidelines, the maximum amount that a seller can contribute towards a buyer's closing costs is 6% of the purchase price. For a $275,000 home that would be $16,500. Depending on the purchase price of the home a buyer's closing costs can range from $5,000 to $10,000+. Transfer taxes and recordation fees make up a fair share of the buyer's closing cost. As part of an offer on a home, in addition to any buyer's closing costs the seller is willing to pay they will also usually agree if asked to split the cost of transfer taxes and recordation.

The seller could also accept to contribute the $6,000 toward the closing costs, while also increasing the property's sale price by $6,000. Should this be the case during negotiations, know that the seller is essentially saying that you should finance your own closing costs as part of a loan. If agreeable, accepting this will work fine as long as the house will appraise for the increased sale price. 

Contingencies in the Agreement 

Finally, from the example I cited above a seller can decide to launch a counter offer rejecting or modifying certain contingencies already made in the agreement. Sellers always accept the home-inspection contingency and financing contingency. The reason why they do this is because they know the majority of the buyers won't agree to move forward in the absence of the contingencies. 

Note that if a buyer tries to make the contingency based on the sale of their current home, a seller may refuse. This is especially true if the real estate market is in a slow state. You may find it difficult to negotiate this part of a counter offer. 

Having the financing and inspection contingencies is your contract is important for your protection. In this way, if your financing on the home falls through or the home inspection uncovers serious issues with the house that the seller is not willing to fix then you can back out of the contract and get your earnest money deposit money back.


Remember, our team of licensed Realtors and Mortgage Brokers here at Buy a New Home in Maryland are here to help you from A-Z in the home buying process. If we can assist you in any way, do not hesitate to give us a call at 443-605-5977. Or simply provide us your Contact Information and we will give you a call.

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