One of the biggest steps in the home buying process is actually putting a purchase offer in on a property. After making an offer there are two outcomes either the seller rejects or accepts the offer.
It can be heartbreaking for a buyer when their offer gets rejected. Often times the reasons why home buyers’ have their offer rejected are the same. If you’re in the process of buying a home or you’ve just begun thinking about buying a home, make sure you avoid the following 10 reasons why home buyers’ purchase offers are rejected.
No Pre-approval or Pre-qualification Letter
Arguably one the first and one of the most important steps in the home buying process is getting pre-approved for a mortgage. There are many reasons why a mortgage pre-approval is important and not the same as pre-qualified for mortgage. The former is way more powerful when it’s accompanying an offer, as the home seller can rest assured that this buyer has been vetted by a financial institution for the necessary funding needed to purchase the property!
A very common reason that purchase offers are rejected is because a pre-approval or pre-qualification letter has not been submitted or obtained. It’s understood that a pre-approval is more desirable, however, at the very least a pre-qualification letter should be submitted with an purchase offer. Without a mortgage pre-approval or pre-qualification letter, a seller has absolutely no idea if the buyer can obtain a mortgage for their home.
Offer Was Too Low
There are two ways to look at this: you have offers which are ‘just below’ asking price, and then you have the low ball offers (that’s an offer way below the fair value of a property).
Some buyers’ don’t realize they are submitting low ball offers and it’s likely because they are not being educated properly on the subject properties market value. Certainly the decision on what to offer a seller is completely at the discretion of the buyer, however, a top buyers’ agent should be able to advise the buyer on what similar homes have been selling for.
Whereas low ball offers do happen on a regular basis and tend to be a common reason for rejection, offers which are slightly below asking price (fortunately!) do happen more often!
You Asked For Items Even Though They Weren’t Included
When selling a home, there are sometimes items that mean so much to a seller that if a buyer offered them more than the market value, they would not part with a specific item. It’s common that a will seller choose to exclude certain appliances, light fixtures or chandeliers, plants, drapes, or other personal items. They ask their real estate agent to make sure other agents understand the items are excluded.
Another common reason is because buyers’ will ask for items that clearly were not included in the sale. If you’re buying a home and decide you still want to ask for the seller to include the washer and dryer, even though the Realtor indicated they were a wedding gift from their parents and your offer gets rejected because of that, don’t be surprised.
Requested Seller Concessions Were Too Much
Seller concessions are one of the top reasons why a purchase offer is rejected however. A buyer who is asking for a large contribution from a seller must understand that even though the offer price was close to asking, the seller is still forgoing a large amount of money to help contribute to the buyers’ closing costs.
One of the biggest mistakes home buyers’ often make is requesting seller concessions even though they may not need them. If you’re buying a home and absolutely need a 6% contribution from a seller, just understand, there is a good chance that your offer maybe rejected. If you absolutely need seller concessions, keep in mind the price you’re thinking of offering the seller.
Listing Agent Wrote Competing Offer
When buying a home there is a certain degree of luck and fate that is needed. A possible reason why a buyers’ purchase offer is rejected is because the listing agent also has written a competing offer. In the case of a competing offer written by the listing agent, if the offers are fairly similar, in almost every case, the buyer whose offer was written by the listing agent will probably be accepted.
If this is the reason your purchase offer is rejected, you should chalk it up to bad luck and the fact that it wasn’t meant to be.
Weak Earnest Money Deposit
A top frequently asked question from home buyers’ is about good faith deposits also known as earnest money deposits. When buying a home, the buyer is asked to give a deposit within a few days of an accepted purchase offer. The earnest money or good faith deposit is used to show a seller that the buyer has full intent to purchase their home. The earnest money deposit is traditionally held in the listing brokers escrow account until closing.
A fairly common reason why a purchase offer maybe rejected is the buyer was only giving a small or “weak” earnest money deposit. A strong earnest money deposit is at least 2-3% of the homes purchase price. For example, if a purchase offer is written for N200,000, a strong earnest money deposit would be at least N4,000. If a seller receives a purchase offer for N200,000 and an earnest money deposit of N500.00, they may decline the offer.
A small earnest money deposit may indicate a couple things to a seller. First, it can raise concern that the buyer is not very serious about purchasing their home. Another concern a seller may have with a small earnest money deposit is that the buyer does not have very much money saved up. If purchasing a home, a buyer should plan on giving a deposit of at least 2% of the purchase offer price. If the buyer is purchasing a home with cash, they should expect the deposit to be more than 5% of the purchase offer price.
Lots Of Contingencies
Almost every purchase offer will have a handful of contingencies. Some contingencies are more common than others. Some examples of common contingencies include an acceptable home inspection contingency, sale and transfer of title contingency, and the attorney approval contingency.
With contingencies also comes the level of uncertainty for a seller. If a purchase offer is filled with tons of contingencies, a seller has the right to be concerned whether the transaction will actually end up at the closing table. Seller’s are rightfully concerned that contingencies give a potential buyer many “outs” to the transaction.
There are many reasons why having a home inspection is a good idea when buying a home, however, buyers’ will waive their inspection contingency so their offer will be accepted. While it’s not suggested to waive certain contingencies, such as the home inspection contingency, it does happen.
Time Frame Didn’t Work For Seller
Another popular reason why purchase offers are rejected when buying a home is because the time frames didn’t work for the seller. Since every seller’s situation is different, there is no exact time frame for purchasing a home.
If you’re buying a home and know you need to be moved out of an apartment within 60-75 days, your buyers’ agent should make sure the timing works for the seller, before even looking at the home. If the seller needs to remain in possession for 90 days, writing a purchase offer that targets a closing in 60 days is a waste of everyone’s time. A top buyers’ real estate agent will know what questions and answers to find out before writing the purchase offer. If the timing is less than desirable for a seller, it’s a good chance the purchase offer will be rejected.
The Seller Is Difficult & Unrealistic
Unfortunately there are some home owners who are nearly impossible to negotiate with and this is a top reason why purchase offers are rejected. Even though a buyers’ purchase offer is for full price, asks for no seller concessions, and waives their inspection contingency but the timing may not be exactly what the seller wants, the offer may get rejected. Sounds crazy right?
It’s important before beginning a house hunt buyers’ understand that some seller’s will be difficult and unrealistic. This can eliminate a lot of frustration for a buyer when a great purchase offer is rejected.
Your buyers’ Agent Isn’t Easy To Work With
Why would a buyers’ agent have anything to do with whether a purchase offer is accepted or rejected? Actually it has a lot to do with whether a purchase offer is accepted or rejected, for many reasons. A real estate agents reputation with the public is extremely important but it’s also extremely important with their peers. The real estate community is a tight-knit community. Since top producing real estate agents often do several deals throughout their career with one another, they know who is easy to work with and who is not.
If a real estate agent has the reputation with their peers that they are incredibly hard to work with, unresponsive, and lazy, it’s possible you may have your purchase offer rejected because of this. It’s important that when buying a home and while interviewing buyers’ agents, you try and find out how their reputation is with other real estate agents. Ask other real estate professionals about the prospective buyers’ agent you’re thinking of choosing and see what their response is.
Finding “the perfect home” is only a small part of the home buying process. Successfully having a purchase offer accepted is a step in the process that is often overlooked. It can sometimes take a buyer several attempts and several rejected offers before they successfully have one accepted. Many of the top reasons why purchase offers are rejected can be completely avoided by a buyer. Understand what the top reasons are and how to avoid them is huge.
The above top 10 reasons why purchase offers are rejected should be avoided at all costs, if you truly want your “perfect home.” Before your real estate agent writes a purchase offer, make sure they’ve done their homework and understand the sellers situation, knows what’s included and what’s not, so that your purchase offer will be accepted!