I agree about sellers not being insulted. We just recently sold our house and after lowering our price by $20,000 we had an offer that was $15,000 below our newly lowered price. We told our realtor that we could not accept the offer so the buyers countered again and our realtor ended up paying the closing costs. It was a win/win for all of us. We weren’t insulted with the original offer we just knew it was time for our realtor to work for her commission and make the deal happen and be within our price range.

On another note – We have bid on bank owned homes and apparently the rule with banks is if you bid within $30,000 of the current asking price then they will respond with a counteroffer and most will pick up some if not all closing costs. Any offer that is $30,000 or more lower than the current asking price the banks generally will not respond (at least not now).