Q: We wrote an offer on a property last week. It was a very strong offer in our opinion, and we came in below the asking price since it seemed to be priced a bit high. The seller sent us back a counter offer above the asking price, even though ours was the only offer. Needless to say, we were taken aback by this, and feel somewhat insulted. Is this legal?
A: That is a great question. Without knowing the details on the property, it would appear the seller has an overly optimistic opinion of their home. As you know, the market has been very strong for the last several months. However, it has cooled a bit, and sellers are often the last to get the memo when market conditions change. And your reaction is a logical one. As I see it, there are 2 questions here. Is it legal, and is it smart?
For the first question, it is legal for the seller to counter your offer with any terms that are acceptable to them, even if it is above the asking price. So no they are not breaking any laws by countering your offer above the asking price.
Is it smart? Now you’re on to something. Again without knowing the details, it does not appear to be a wise decision on the part of the seller or listing agent. We all wish things were different from time to time. I wish my Cisco stock was still selling for $80 per share. I wish I was 30 again.. etc etc. But when it comes to selling a property, it is always best to deal in the here and now. The seller likely wanted to get multiple offers on their home, and probably thought they priced it at a level that would generate multiple offers. But alas they did not materialize. Clearly they misjudged the market. One thing you can count on in any market is that the law of Supply and Demand will trump all. So rather than accepting that the market is not where they the seller want it to be, they counter you above their asking price hoping to get what they want for the property.
As a buyer, this is a troubling sign. Even if you are willing to pay their price, they are sending a signal that they are probably not going to be easy to deal with. Unrealistic parties seldom are. Fortunately for you as the buyer, the market has cooled a little. So as I see it, you have 3 options. (1) Engage with this seller. You can counter them back at a more reasonable price, or even accept their counter if you really want the house, or (2) walk away from this deal and send a message to the seller, and if it does not sell in the next 2 or 3 weeks you can pursue it again after the seller has a chance to become more reasonable (assuming another buyer doesn’t enter the picture), or (3) Move on to another property. It is really your call. From a practical standpoint, it is always best to try to remove emotion from the equation. While your initial reaction is one of feeling insulted, try to step back and look at the situation objectively. You will make better decisions when you approach it from logic, rather than emotion. Good luck!