Irene Prinsloo, manager of leading Pretoria estate agency Homenet Pretoria, says that there are essentially three and possibly four parties involved in the counter offer scenario – the buyer, the seller, the estate agent and in some cases another buyer. She notes that understanding the legal basics is essential because in these cases, you, as a seller, are dealing with the offer to purchase from the buyer, which becomes a legally binding document once you accept it.
The estate agent is obliged to present all written offers to you, but may not disclose the details of any of these offers to a buyer.
If you would like to change one or more of the terms of an offer, you can make a “counter offer”. This must be presented in writing. “And on this subject,” Prinsloo says, “sellers must understand that they can't unilaterally make changes to an existing offer from a buyer. If they alter the document in order to make a counter proposal, it then has no legal standing and has to be approved by the buyer in writing to become valid again.”
Alternatively, if the term of a buyer’s initial offer has expired, he or she may choose to make an altogether new offer that incorporates some or all of your counter proposals – and this places the onus back on you to accept or reject it. “From the seller’s point of view the best advice is to grant a sole mandate and allow one professional agent to manage the whole offer process, instead of having to deal with multiple offers coming in through several different agents.”
Counter offers however, can often be an extremely useful selling tool. Meeting halfway is part of the business process, leaving each party feeling satisfied at the end of the day. With this in mind, the counter offer process, as part of the property transaction, can be beneficial to both you and your potential buyers.
Barak Geffen, Executive Director of Sotheby’s International Realty SA says, “Meeting each other halfway helps to fulfill aspirations on both sides of any business transaction. ‘Courtship’ is essential. Without it consumers feel the deal was made too easily, making them believe they may have made the wrong decision or been taken for a ride. Sellers feel they could have got more and buyers feel they could have paid less.”
Geffen says that negotiating through the counter offer process encourages a sense of urgency, compromise and value in the agreement reached: “By advertising a property with both an ‘asking price’ and an ‘offers from’ figure the agent is able to attract and satisfy both the buyer, who feels he can negotiate, and the seller, who feels he can get the highest possible price.”
This two-tiered system spurs on a healthy negotiating or counter offer process by giving both seller and buyer comfortable starting points from which to negotiate, according to Geffen. “Bearing in mind that buyers typically view just 30 properties out of 300, only 10 percent, before buying, a property needs to capture their attention, not only aesthetically but through price and value for money – every buyer is looking for a bargain.
“Without alienating you, it is important for the agent to advertise your home at an appealing price, leaving the door open for a deal to be struck somewhere in the middle. Over-priced homes are sure to be given a miss by most urgent buyers,” concludes Geffen.
Full article written by Isabella Verna and excerpts reproduced with permission from Home Front, November 2006