If your offer is not accepted – then what?
There are several reasons why a home seller might reject an offer from a would-be buyer. Maybe they had a stronger bid from someone else, or one that asked for fewer concessions. Maybe they felt there was something questionable about your finances. Read some of the reasons an offer may have been rejected:
TOD’s TOP 6 Common Reasons Why Sellers Reject Purchase Offers
Why did the seller reject your purchase offer? Chances are, it was for one of the reasons listed below, or even a combination of these factors.
- They received a higher offer.
The seller might have received a higher offer around the same time you made your offer, or shortly before yours. It's common for sellers to collect and review a "batch" of purchase offers before responding to them, especially in a hot market.
- They have unreasonable expectations.
Some sellers are realistic about local market conditions. They understand the driving forces of supply and demand. They have a pretty good idea what their homes are worth in the current market. They set their asking prices accordingly. Other sellers have their heads in the clouds. You never know which type you're dealing with until you make an offer to buy the house.
- You don't have your financing lined up.
Have you been pre-approved for a home loan? Or, do you have money in the bank for an all-cash purchase? If you've answered no to both of these questions, you've given the seller a good reason to reject your offer. Homeowners want to know that you have some kind of financing lined up, and they'll want to see proof. Otherwise, they won't be inclined to put the house under contract.
- You asked for too many concessions.
Did you ask the seller(s) to pay some, or all, of your closing costs? If so, that might be the reason why they rejected your initial offer. When you ask the homeowner to do or pay something above and beyond the purchase price, it is known as a "concession." They are also referred to as seller-paid contributions.
Whatever you call them, homeowners hate them. After all, concessions essentially chip away at their proceeds / profits (unless they raise the sale price to compensate for it).
- You skipped the earnest money deposit.
In a typical real estate scenario, the buyer will offer to put a certain amount of money down in the form of a deposit. It shows they are serious and earnest about buying the house, and is therefore referred to as "earnest money." The buyer usually makes a deposit (or the promise of a deposit) during the offer stage. It's usually written into the purchase agreement.
The amount varies from a flat $500 - $1,000, up to 2% or 3% of the sale price. Generally speaking, buyers make larger deposits in hot markets in order to get their offers accepted by the sellers. On the contrary, buyers tend to pay less earnest money in slow markets (where there is less need for it).
- They didn't like the type of loan you were using.
Some sellers (and their listing agents) are prejudiced against certain types of financing. For instance, some real estate agents feel that FHA loans are harder to deal with because the appraiser is required to inspect all sorts of "health and safety" items, in order to meet FHA's minimum property standards. There is some degree of truth to this, but it is largely blown out of proportion.
TOD's TIP: As a home buyer, you should use the type of mortgage product that works best for you. If a seller takes issue with your financing method, for whatever reason, then that's their problem -- not yours.