A counter offer is an offer which improves, or modifies, another offer previously submitted by ourselves, or by third parties, in a negotiation.
In other words, we say that someone has made a counter offer when we talk about a negotiation. In a negotiation, as we know, the buyer can accept the price that the owner of the property is asking for or, on the contrary, he can make an offer. If this offer is rejected by the holder, it can be responded with a counter offer.
Linking it with the technical definition, this new offer that, as its name indicates, counteracts the previous one, must be better or, at least, modify the amount offered in the first offer. Otherwise, we would be insisting that the holder accept the first offer and not a new one. If we are talking about a counter offer, we are referring to an offer that improves the one previously presented, being our intention to acquire said good.
Types of counter offer
However, we must know that we are talking about a concept that can be presented in many ways.
In this sense, let’s imagine, as in the simple explanation, that we want to acquire a good for which we have made an offer, having been rejected by the owner of said good. Since it is a negotiation between individuals, we will make a counter offer if we are still interested in acquiring the property, agreeing that the previous offer should be improved.
In the same way, let’s imagine that, in a negotiation, a second interested party makes an offer, improving an offer previously launched by a first interested party. In this way, we say that it is a counter offer, since it improves the offer launched by the first buyer, forcing the latter, if he is still interested in the good in question, to improve the offer.
And we say goods in the same way that we can say services.
That is, we can talk about a labor counter offer. In other words, imagine a negotiation between the human resources staff at a company and a new candidate. The company can make a job offer, with conditions and a salary that can be rejected by the candidate. Thus, the company can make a counter offer to convince you that you should choose that company.
Or imagine the case of an employee who is already in the company and receives an offer from another competing company. The company this employee works for may offer a counter offer that counters the offer of the other firm.
In summary, we must know that we speak of a counter offer when we refer to an offer that improves a previously launched offer. This, in a negotiation.
Real estate counter offer
Perhaps one of the best examples to understand what a counter offer is can be found in the real estate market.
Home prices are highly subjective, and are subject to haggling and negotiation. For this reason, the counter offer will be a fundamental element in this type of negotiation, since, in a certain way, the purchase itself raises the need to negotiate.
The seller of this type of goods, as with other such durable and valuable goods, usually places the price above the value that he really accepts. Therefore, the buyer, from the start, knows that he will negotiate to obtain a lower price and saves on the purchase of the home.
So, let’s imagine that we are going to buy a house and make an offer to the owner for $ 100,000. If he rejects the offer and we are still interested in acquiring the home, we will make a counter offer that will improve the previous one, which could be that counter offer, for example, of $ 105,000.
Let’s also imagine that we are interested in a home and, days before buying it, a new interested party appears who makes a counter offer that improves the conditions of ours, and that is equivalent to a greater capital. Here, or we launch a new counter offer, or if we are not interested or want to continue studying alternatives, we discard the purchase of the property.
Counter offer example
To finish, and since we have already seen numerous examples throughout the article that help us understand what a counter offer is, let’s finish by looking at an example of a counter offer in a business negotiation.
Imagine a company that wants to acquire a company, which has been valued at $ 5 million. Imagine, too, that another company launches an offer of 6 million to acquire that company. However, the company planned to spend 8 million on the operation.
Thus, given our interest and that we are still interested in buying the company because it falls within our budget, we launched a counter offer, of 7 million or 6.5 million for example, to exceed the previous offer.