When you make an offer on a home, you want the seller to accept it. Unfortunately, this doesn’t always happen. Sellers have one thing in mind while you may have another. This may cause the seller to reject your offer, but it doesn’t mean it’s the end of the road for you. Oftentimes there is room for negotiation. This may take a few days or even a few weeks, so patience is required for this process!
Before you make an offer on a home, you should know the most common reasons sellers do reject offers. This way you can make your offer as attractive as possible to a seller.
You Didn’t Offer Enough Money
Sellers list their home for a specific price for a reason – they want to get that price for the home. While it’s true that some sellers price the home slightly higher because they know buyers will likely bid something lower, they still want to make a profit.
Before you make an offer on a home, do your research. If you are working with a realtor, he/she can help you know the average price of homes in the area. If you are working on your own, you can consult with an appraiser or do your own research online. Base your bid on the prices of recently sold homes in the area that are comparable to the home you want to buy. If you bid within that price range, you may have a better chance of not offending the seller and even having your bid accepted.
You Aren’t Putting Enough Earnest Money Down
Even though the seller can’t touch your earnest money until you close on the home or you illegally back out of the contract, it gives the seller peace of mind. Earnest money is like a guarantee that you will buy the home. It lets sellers know that you are a serious buyer.
As a part of your offer, you will need to tell sellers how much you will put down in earnest money. If it’s a low amount, a seller may think you aren’t a serious buyer and may pass up on your offer. On average, sellers like to see between 2% and 5% of the offer price as earnest money. On a $200,000 loan, that means between $4,000 and $10,000 down. Don’t worry, if you have a legitimate reason to back out of the contract, meaning the reason is covered in the contract, you’ll get that money back.
Your Offer Doesn’t Meet the Seller’s Requirements
Some sellers have specific needs when selling their home. For example, they may need to rent the home back after closing or they may need a closing within the next 30 days. If your offer doesn’t accommodate the seller’s needs, they may reject your offer.
Sometimes the seller’s needs have nothing to do with the closing date, but rather what they need to feel good about the offer. As we discussed above, some sellers want a specific amount of earnest money for peace of mind. Other sellers want to sell their home ‘as is.’ If you require that the seller fix certain things before you buy the home, they may not accept your offer.
You Don’t Have a Pre-Approval Letter
Some sellers are strict enough that they don’t let buyers into their home unless they have a pre-approval letter. Other sellers don’t ask for the pre-approval letter until you put an offer in on the home. Either way, if you don’t have that pre-approval letter by the time you put in a bid, the seller may reject your offer. Without financing, the seller has no way of knowing how serious you are about buying the home.
That pre-approval letter gives the seller the peace of mind knowing that you can afford the home and are serious about buying it. If you want a seller to accept your bid, take the time to get pre-approved for a mortgage before you start shopping for homes.
Your Offer is Too Needy
Just because you are offering the seller money for their home doesn’t mean you can’t ask for things in return. Some buyers go overboard though and ask for too much. For example, if you ask the seller to help you pay your closing costs and you ask to keep all of the appliances in the home, the seller may feel like he is giving you too much.
Instead, be selective with your concessions. Think about what you really need to make the home purchase a sound financial choice. Take into consideration the needs of the seller and the activity on the market. Is it a seller’s market right now because there are many buyers looking for homes? If so, you may want to keep your need for concessions to a minimum.
Sellers have the right to turn away any offer thrown their way. If you want to increase your chances of an offer being accepted, figure out what the seller is looking for and make your offer as close to what they want as possible.