Reasons Offers Are Rejected
Home buyers are faced with having to make many decisions throughout the home buying process. One of the most important decisions that has to be made, and one that will lay the foundation for the entire transaction afterwards is putting together a purchase offer on the property. Initially, the state of your local market will have a great deal of influence on formulating an offer. If it is a buyers market with heavy inventory then you have more leverage. If it is a sellers market with low inventory, you may end up dealing with multiple offers, and competing with other buyers to win the contract. Avoiding these simple tips can help to avoid having your offer rejected by the property owners.
Pre-approval or Pre-qualification Letter
No buyer should ever make an offer on a home without first establishing they have the financial backing to support their offer. Many agents will not work with buyers until they have procured at least a pre-qualification letter, and the pre-approval shows the buyers intent, and that they have taken the extra steps with their mortgage lender to establish the validity of their offer. Without this documentation, the seller has no way of verifying whether the buyer will be able to obtain a mortgage to complete closing on the property.
Offer Was Too Low
When it comes to low ball offers, I like to ask my buyers to please put themselves in the sellers shoes. How would they feel if they were selling their home, and received a very low offer to test the waters. Often the seller will be insulted, to the point of refusing to acknoweldge the offer with a response. The final decision of how much to offer for a property is ultimately up to the buyer, however, it is their agents responsibility to provide information to their client as to the market value of the home. This can be done by sharing similar homes that have recently sold, and the sales prices, or doing a full CMA (Comparative Market Analysis) of the property for their client.
You Asked For Items Even Though They Weren’t Included In The Listing
Sellers will often exclude specific household items or appliances from the initial listing. These items can include appliances, window treatments, lighting fixtures, or other personal items such as furniture. Before a buyer ask for these items to be included in a purchase agreement, it should be remembered that a real estate transaction is a tremendously emotional time for both them and the seller as well. Asking for the seller to part with items they may have an emotional attachment to can be an immediate deal killer. Even appliances could have been a house warming gift from the sellers grandparents, so basically you never know what a seller has developed an attachment to, or why. It may be worth having your agent reach out to the sellers agent to inquire if the seller might consider including the items in question, but be careful of pushing to hard. Remember you are buying a home, not an appliance or piece of furniture.
Requested Seller Concessions Were Too Much
When a seller agrees to a concession, they are agreeing to provide a monetary contribution towards the sale of the home. Unreasonable concessions are one of the primary reasons offers are rejected by sellers. If you are putting in an offer on a home in which you have to ask the seller to pay a large amount towards closing or you cannot afford to buy the home, then perhaps you need to reconsider making an offer. Again, a sellers motivation can vary based on the state of the local real estate market, and if the house has been listed for a long time, the seller may be more willing to negotiate higher concessions. Be knowledgable before asking for too much.
Low Earnest Money Deposit
When preparing a purchase offer for a home the buyer will be asked to provide a earnest money deposit, also known as a good faith deposit, normally within three days of binding agreement. In most transactions the earnest money deposit will be held in an escrow account with the buyers brokerage firm until the time of closing. A solid earnest money deposit is aproximately 2-3% of the purchase price. A seller may decide to reject an offer if the earnest money amount is too low, as it shows a lack of committment on the buyers part. Another potential concern for the seller in this situation is if the buyer has limited funds for the earnest money deposit, are they financially going to be able to meet the monetary requirements to secure their mortgage loan.
Time Frame Didn’t Work For Seller
Sometimes a conflict between timeframes required by the buyer may occur with a sellers timeframe needs. One instance may be that the seller will need time to find a new home to move into after their current property is under contract. As a buyer, communicate with your agent if you are going to have a specfic timeframe you will have to work with, possibly because of a rental lease coming to an end. An experienced agent will know to discuss these dates with listing agents prior to making appointments to ensure that you as a buyer are not wasting your time looking at homes that you will not be able to move in to prior to your lease expiration causing problems.
The Seller Is Difficult & Unrealistic
We all know that certain someone that is just unbending, and unwilling to negotiate. There will be times when no matter how perfect you feel an offer is, there are sellers that will have an issue that just can't be resolved. It could be just about anything, maybe they do not like the closing date, they may not want to agree to a specific contingency, pretty much anything could be the reason for a difficult seller to reject an offer. Unfortunately it is just a fact of life that buyers will not be able to please every seller with every offer, and knowing this can help to eleviate frustration in the future if an offer is rejected for what may seem like unrealistic reasons.
Your Buyer’s Agent Isn’t Easy To Work With
Most real estate transactions will have two agents involved, one as a buyers agent, and the other as the listing agent. Now you may wonder how your buyers agent could affect the outcome of an offer. Just as an agents public reputation is of the utmost importance, rest assured that their reputation with other agents is equally important. If the buyers agent has a reputation with their peers for being difficult to work with, as having poor communication skills, or just plain lazy, then this could affect the encouragement the listing agent has while presenting the offer to the home owner. While interviewing your potential buyers agent, ask questions based on these character traits to help determine their work ethic.