Buying or selling real property is a lot like a game of chess. You make a move, then the person on the other side of the board makes another move to counter yours. Real estate negotiations may go back and forth several times before a final deal is reached. Each party must sign the offer or counteroffer he's presenting. You don't officially have a deal, however, until both signatures are on the same form.
Making a Counteroffer
The first offer you receive from a buyer is probably not going to come in at your full asking price and it's not going to be perfect. Real estate offers include a great deal more than just price, and you may find, for example, that even if the buyer is willing to pay close to what you’re asking, he may not be willing to close for six months. If even one minor detail is not satisfactory to you, you're not under any legal obligation to accept the offer and sell your home – although if it's for full purchase price, some states may require you to take your home off the market if you don't accept it. Otherwise, you have the option of simply not signing the offer. The buyer signed the offer when he submitted it to you, so if you sign as well, you've got a legally binding deal. If you want to keep the negotiations alive, you can submit a counteroffer to the buyer instead.
Countering a Counteroffer
After you submit a signed counteroffer to the buyer, he's in the same position you were in when you received his initial offer. If he signs it, he's accepted your terms, and this is a legally binding agreement to purchase your property according to those terms. He doesn't have to sign it – he can walk away from the negotiations, or he can counter your counteroffer. Now you're back where you started, except the buyer has presumably sweetened the pot a little – he can't counter your counteroffer by insisting on the same terms in his initial offer. At this point, you might both be adjusting the price incrementally as you volley proposals back and forth, or you might decide to accept that six-month closing date after all. If so, you have the right to counter again, indicating your acceptance of that detail by your signature on your latest counteroffer.
Accepting a Counteroffer
If you sign the buyer's counteroffer, there's no turning back, and your real estate agent should advise you of this. If you change your mind after you sign, the buyer can sue you for breach of contract if you try to back out of the deal. This works both ways, however. When the buyer made his initial offer, he most likely put down earnest money. If he signs your counteroffer then reneges on the deal, you often get to keep the earnest money.
Counteroffers aren't mandatory, and you can muddy the waters and possibly lose your buyer entirely if you quibble over fine points. Both sides have the right to throw their hands up in the air and walk away. If you're working with a real estate agent, she'll probably guide you in this respect. If you're not, you can always take a deep breath and a step back to ask yourself just how important a certain detail really is. Offers and counteroffers usually have deadlines, but they're rarely immediate, so you should have time to weigh your options.
Beverly Bird has been writing professionally for over 30 years. She is also a paralegal, specializing in areas of personal finance, bankruptcy and estate law. She writes as the tax expert for The Balance.