Should you include reasons with your counter offer?

[showtime]

When you are buying or selling a home, and you are in the midst of negotiations and about to submit a counter-offer, should you include reasons for why your offer is that low or high? Or is it better to just counter back with the price and leave it at that?

I just wonder which is more effective. For example, if you're the buyer and you include a bunch of reasons for why the listing is over priced and why your low offer makes sense, would those reasons even make it to the seller? And if it did, would it be counter-productive because the seller might get mad?

Thank you!

[Eddie McGowan]

Great question! and the answer is... "it depends" lol

Generally, for a buyer, I would not give any explanation for the initial offer and for probably the 1st counteroffer. It's generally too early at that stage, and you don't want it to seem like you're apologizing for your (low) offer. After that, you might consider it - to lend support to your position.

There are 3 clear exceptions, however:

1. when you're a buyer and your first offer is far less than the asking price, or
2. you're a seller and you just received a very low offer, or
3. you're either party, and after several rounds of counteroffers there is still a large difference in the 2 parties' offers.
   
   In these circumstances you would want to show why there is such a large difference, right off the bat.. You do not want to give the impression that your offer is "insulting" or made based on ignorance, or that your asking price is insane (unless maybe it is, and you know it is - so in that case I would say nothing but numbers and try to find a way to make the deal work based on negotiated terms).

When you do want to offer reasons for an offer, it should be cold and numerical. Not based on "feelings". This will deflect the perceived "negativity" of the offer away from you (the person) and try to lay it on the facts ("it's not me, it's just the darned market right now"). For example, Instead of saying "I don't like the look of your kitchen" or "your kitchen needs a lot of work", you might prefer to say: "the comparables in this market have recently-updated kitchens and they sold for less than what you're asking - I'm just looking for a fair price, not a bargain."

Always use adjusted comparables to substantiate your reasoning, and use adjustments that are in line with appraisals in your area. You always want to be respectful in whatever you might say, and offering adjusted comparables might be the only way to do that if your "opponent" is being unreasonable.

Concerning your question about whether your reasoning actually gets presented to the seller: If you're working with a buyer agent, then you likely have a means of personally presenting your offer to the seller. This mechanism is provided in almost all Multiple Listing Services since they are usually associated with local Realtor(R) boards. If you are dealing directly with a listing agent, then you have to convince that "gate keeper" that the only way to ever close a deal on this property is if the price is within the "value range" - as determined by the comps. You might also mention that if a mortgage is involved - and they usually are - then the appraiser will likely see the same comps that you are providing and the deal would simply fail due to a low appraisal. That is never good for anyone, including the agent.