Buying real estate can be extremely emotional. After looking at several homes, you finally put an offer in on one. Truthfully, you probably have already "moved yourself in" to the home in your mind. Then you receive the news that your offer was not accepted.
The best case scenario is that you are presented with a counter offer and can get a better idea of why your offer was not appealing to the seller's. Worst case, you get no feedback. Wouldn't it be better to go into the process with an understanding of why offers to purchase real estate are often rejected?
#1 The Price Offered Was Too Low
In our current market in the Denver Metro Area, it is not uncommon to see multiple offer situations on properties priced appropriately for the market. This is often the case for any property under $400,000. Now, if a home has been on the market for 10 days with no offers, the seller may be willing to consider an offer a bit below their asking price. Your Realtor can help you determine if the reason they have not had an offer go through is because it is indeed priced too highly for the market, or in a less than desirable condition.
The way in which your Realtor communicates with the seller's Realtor is key to finding out more information on the seller's situation and motivation. They can also help you determine a fair asking price. However, if you are "trying to get a deal" by throwing out an extremely low offer to see if it sticks, you just might offend the seller enough for them to not even bother with a counter offer. They might decide that you are not a serious buyer and may suffer buyer's remorse later in the transaction. Always trust your Realtor's expertise in guiding you to an appropriate range for the offer price, but it is ultimately your decision what you are willing to pay for a home.
#2 The Terms Were Unacceptable
Terms are just as important as the offer price. This is something else that your Realtor should discuss with the listing agent before the offer is constructed so that you know what terms are important to the seller. If the seller has stated that they need a 60 day close and you insist on a 30 day close or vice versa, those terms might be a deal killer.
In our current market, if you have a contingency (need to sell your current home to buy), you may find that your offers continue to fall flat. It is simply that your offer is at a greater risk of not closing because too many dominoes have to fall into place. You may have a greater chance of having your offer accepted if your home is listed and already under contract. It is even more appealing if you have had the Inspection and Inspection Resolution completed. It can be scary to sell your home without having a home to move into, and it is important to have a Plan B in place for short term residency.
Other terms that we have seen offers lost over are Appraisal and Inspection. If you are in a multiple offer situation, the price can be driven up to the point where some buyers are willing to waive their right to cancel the contract based on an appraisal lower than the offer price. In this case, they must show proof of funds to bring to the closing table in order to make up the difference in purchase price. Some buyers are willing to waive Inspection. I would never recommend this as either a listing agent or buyer's agent since it raises many legal risks for both parties. Just be aware that you may lose an offer to someone willing to take this enormous risk.
#3 You Did Not Get Pre-Approved for a Mortgage
Again, we are in a fast-paced, seller's market. It is imperative that you go through the pre-approval process with a respected lender before you even look at properties. This indicates to the seller that you are a serious buyer and able to complete the funding process for the purchase of this home.
When placing an offer, you will want to include a pre-approval letter that specifically addresses the property you are making an offer on. Many seller's will not even entertain an offer that is missing this important element and pre-approval can take a few days to a week to complete. In our market, when you see a home that you would like to purchase, you need to be prepared to put an offer in quickly. By quickly, that could mean within a day or even hours, depending on when the seller is reviewing offers.
These are just three of the reasons that your offer may be rejected. Every transaction is unique, as is every seller and their motivations. It is important to work closely with your Realtor and trust their expertise in the current market.