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What is a Counteroffer?

An employee negotiates a salary offer with an employer.
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  • Written By: Tricia Ellis-Christensen
  • Edited By: O. Wallace
  • Last Modified Date: 02 September 2014
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“Never accept a first offer,” is often a hard and fast rule in dealing with salary negotiations. This adage also applies to offers of payments for things like homes, automobiles and the like. Even at the local flea market, where prices may exhibit some flexibility, you may find yourself making what is called a counteroffer, a negotiation that either raises or lowers the price of an original offer.

In many instances, especially when purchasing things in grocery stores or at retail outlets, we have set prices. This is not always the case in other countries, and some price flexibility or bargaining may be expected. A first price offered, when bargaining is expected in sales, is usually much higher than the person could sell an item for. The person making the counteroffer will respond with a much lower price. This may result in series of counteroffers between buyer and seller, until a price is agreed upon or the buyer feels the price is still too high and decides not to purchase something.

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We still see examples of offer and counteroffer in a variety of settings in which goods are bought and sold in the US. The flea market, mentioned above, is one example. Other areas of sales where offers and counteroffers fly thick and furious include the real estate and automobile industry. Sellers typically ask for more than they can get, and buyers typically respond with counteroffers in the hopes of coming to an agreed upon compromise. This process may be arrested if another individual, as is the case with home sales, makes an offer on a home or car that beats the original buyer’s counteroffer, or that sometimes is higher than the seller’s original offer.

How well your counteroffer on real estate will be received depends upon the real estate market, urgency or lack thereof of the seller, and interest of other customers in the property. The same holds true when you purchase cars, either from dealers or private sellers. You can almost always expect that vehicles will be offered to you at a higher price than the dealer paid. Knowing bluebook value on a car, understanding the market at present, and the demand for the type of car you’re looking for can help you come up with a successful counteroffer. Usually the initial counter is several hundred to several thousand US Dollars (USD) less than you are willing to pay.

In situations where a salary is being offered, businesses often expect salary to be negotiated. This isn’t always the case, especially in jobs that only pay minimum wage. If you are not desperate in your search for work, you should definitely consider making a counteroffer of a higher wage than the one you are initially offered, unless you feel the wage is very fair and reasonable. It is typical for companies to offer a lower salary and hope you will accept it, or try to gauge your salary interest when you apply for work.

In general, you should not discuss or negotiate salary until after you have been offered the job. If you are drawn into such a discussion, you should cite a salary that is on the high end of what is considered fair for your profession, education and level of experience. In other words ask for more than you can get, but keep it reasonable, and expect the employer to counteroffer with a lower amount that may still be more acceptable than an initial offer.

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