Know what makes home sellers turn down purchase offers and what will make yours more attractive.

When you think you’ve found a great home to buy it’s extremely disappointing to put in an offer and have it rejected by the seller. Here are common reasons why home purchase offers get rejected and what buyers can do make their offer attractive to sellers.

Money reasons for rejecting an offer

Home sellers may reject a purchase offer because the buyer offers too little or too much.

Offers considered too low may be out of line with the home’s value or the buyer may have an inflated sense of what their home is worth.

While it seems like a higher purchase offer would lead to easy acceptance, a seller may turn down a high offer because they don’t think the home will meet a lender’s requirements when it’s appraised. Accepting a high offer from a buyer who can’t get financing ultimately delays the seller. However, a seller may jump on a higher price if the buyer is paying in cash.

In some cases, home sellers have more than one offer before them and a competing buyer’s offer was simply better.

Another money reason sellers may turn down an offer is too little earnest money. A buyer who’s not willing to put up a significant good faith deposit may be more likely to walk away from a deal. When a buyer walks away, the seller has to start over to find a new buyer.

Basing your offer on current market value and putting down significant earnest money can help make your offer attractive to sellers.

The timing doesn’t work

The logistics of every home sale are different, and this includes when the seller wants to leave, when the buyer wants to move in and the closing date. If possible, accommodate the seller’s desired timeline for closing and moving out.

Seller considers buyer requests unreasonable

Some contingencies—like an acceptable inspector’s report within a short time frame—are common in home sales. Too many contingencies about financing, inspections and demands for repairs can make a seller balk.

Limit contingencies to only what’s absolutely necessary. You can avoid a financing contingency by getting pre-approved for your home loan before making a purchase offer.

Commission structure can affect offer acceptance

Another thing that might be at play when a purchase offer is rejected is a variable commission structure. This is when the listing agent and seller have an agreement that if the listing agent also represents the buyer, the listing reduces their commission rate. In this case, the listing agent earns more than if a seller’s agent were also to receive compensation from the seller. This means offers made in-house at the listing agent’s office have an advantage.

The Realtor Code of Ethics and MLS listing rules require disclosure of variable commission arrangements. If one is in effect for a home you want to make an offer on and you’re working with a buyer’s agent, take the commission structure into account so you can make a competitive offer.

Sometimes you can’t tell why an offer is rejected

Sellers may have reasons known only to themselves for rejecting an offer. And, they have no obligation to state why they turn down a purchase offer.

Buyers can ask their agent if there’s anything in the offer that clearly made the offer objectionable so they can make a stronger one next time around.

It’s disheartening when an offer to purchase a home is rejected but don’t lose hope! New real estate listings go up every day and there will be another home out there that suits your taste and needs. When you find it, we’ll here to help with a mortgage.

 

All loans subject to approval. Rates, terms, and conditions are subject to change and may vary based on credit worthiness, qualifications, and collateral conditions. Federally Insured by NCUA