4 reasons why a seller may reject your offer
Avoid ending up with a rejected offer.
As a potential buyer, when you bid on a home, the last thing you want is for your offer to be rejected. This would leave you at square one in search of another home that you would be happy to call your own.
Unfortunately, this happens to many home buyers, especially in today’s competitive market. It’s important to understand some of the common reasons sellers may reject your offer so that you can take smart action in the future to maximize your chances of a successful home purchase.
Here are four of the most likely reasons home sellers might decline once you submit an offer.
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1. The price of your offer is too low
A low bid price is one of the main reasons sellers reject a potential buyer’s bid. This is especially true in a sellers market and when the inventory of available homes is low.
Most sellers are primarily concerned with getting the best price for their home. If you come up with a lowball deal, even though you are hoping to negotiate, the seller may not want to get involved with you and might just pass yourself off as someone who promises a softer deal.
Of course, the last thing you want is to overpay or offer more than the value of a home. This could lead to needing a large mortgage. It could also put you at risk of ending up with a loan that exceeds the value of the property. Or it could mean that the house isn’t valued as much as you offered to buy it, which could prevent you from getting approved for a mortgage.
Your real estate agent should be able to help you decide how much to offer based on comparable sales and an assessment of the market in your area. If you don’t have an agent, you can also search for similar homes to see what they’ve sold. This will help you determine the fair market value of the property.
Know that the seller may counter with a higher number, even if you make an offer that you think is fair. But don’t let that deter you from offering an amount that you think is reasonable, as an amount that is too low could kill the potential of a deal.
2. Your deposit is not large enough
Your offer will usually include a clause stating that you will make a deposit within a few days of accepting the offer. It’s called a down payment, and it’s important for sellers because they don’t want to list their home as on hold (basically take it off the market) unless the buyer is serious.
It is customary for a down payment to be equal to between 1% and 3% of the value of the house. If you are only offering a few hundred dollars or even a few thousand dollars for an expensive house, the seller may not believe you are serious. If so, they won’t want to take the risk of trying to sell you the house.
3. You have included too many contingencies
You almost never just want to make an offer to buy a home without putting any Conditions of sale. Instead, your offer should include certain contingencies or requirements that must be met before you are required to proceed with the purchase.
At a minimum, you will need a home inspection contingency that indicates you can have the condition of the property assessed and the sale canceled if the inspector finds serious issues. Without this eventuality, you could buy a bunch of issues if you later discover issues that require costly repairs.
Also, you may want to make the purchase conditional on a home appraisal as well as your ability to secure a mortgage. Most salespeople are used to these kinds of contingencies and hopefully won’t mind them.
But the more conditions you put, the more likely it is that a seller will decide they really don’t want to deal with you. For example, if you make a conditional offer to sell your current home before you buy, there’s a good chance the seller will reject it. They won’t want their own transaction to be potentially derailed by issues with your current property.
4. The closing date you have chosen does not suit you
You’ll likely also include a date when you want the purchase to be official and ownership of the house transferred to you. This is called a closing date.
However, if you set the closing date at a time that is not convenient for the seller, they may simply reject your offer. For example, if you are extremely impatient to move in because you have already sold your house, you might want the closing date to be in a week. If the seller feels they couldn’t act as quickly, they may simply decide to reject the offer you made.
On the other hand, if you can be flexible about closing their schedule, they might be more willing to sell to you, as it could make their transaction more convenient.
Ultimately, you want to try to make sure that your offer to purchase is as attractive as possible to a home seller without compromising your own financial position. It’s a tough balancing act, but with the right real estate agent and the right research, you can make it happen.