For first-time homebuyers, the thrill and excitement of putting an offer in on a dream house is a memorable part of the journey. But excitement can quickly be dampened by a rejected offer.
Many homebuyers think the main reason their offer on a house was rejected was because of a higher offer. This is certainly one of the possibilities but there are also few other reasons why your purchase offer was rejected.
Knowing a seller’s reasons for turning down an offer can help you improve your chances for the next offer you put in.
Let’s go over five reasons why your purchase offer could be rejected.
1. Offer is Too Low
An obvious reason that your offer was rejected is if the seller received a better, higher offer.
Offers just below the asking price can be common and the seller could easily negotiate. But putting in a low ball offer, a price that is lower than the fair value of the house will get you rejected and you may not even receive a response from the seller.
Sometimes a home is marked up from the fair value and the seller may have wiggle room to come down, but you should consult with an expert before you make an offer that isn’t the asking price.
A real estate agent is able to tell you what similar homes are selling for and can advise you what a fair offer would be.
Homebuying already comes with many expenses outside of the price, such as property tax and homeowners insurance. Working with a professional can help you ensure that everything is affordable so that you can make an offer that is both fair and has a good chance of acceptance.
2. No Preapproval Letter
A letter of preapproval or prequalification is vital to your offer being approved. A preapproval letter will be more enticing to the seller, and a prequalification can also put you ahead of other offers that don’t have one.
You could make an offer that’s above asking but a seller is going to want to see a buyer that is ready to buy and can show proof that they can afford this home. Getting preapproved for a loan by a mortgage lender can put you at the front of the line and save you time.
A seller is unlikely to want to work with someone who still has to go through the preapproval process and could potentially be denied.
3. Too Many Contingencies
The contingencies that you include in your offer are specific things determined by you and your real estate agent that the home sale will depend on.
Having too many or listing uncommon contingencies may scare the seller since they want to get the deal done as soon as possible. If the sale is depending on many other things, that’s just more hoops that the seller, and buyer, have to jump through before closing.
Common contingencies include mortgage contingency, inspections, attorney approval, sale, and title transfer. While some contingencies can be waived, things like home inspections are always recommended. You may also opt for doing a pre-offer inspection to be able to take out any contingencies and put yourself ahead in a competitive market.
4. Bad Timing
The process of homebuying depends entirely on both the seller and the buyer. If your timeline doesn’t line up with theirs, they could pass on your offer.
For example, the seller may still need to find their own new home so a short, 45-day close won’t work for them. Or perhaps, you still need to find someone to buy your previous home but the seller wants to close immediately. There are countless scenarios where a seller could decide that the timeline isn’t right and deny your purchase offer.
This is another reason to be transparent and ask questions with your real estate agent. They should know everything they need to know about your scenario so that they can write the best purchase offer and include any details about timing upfront.
5. Seller’s Reasons
Some sellers are ultimately hard to work with. They might have unrealistic expectations about what they could really get for the house. They may wrongly assume that the first offer they receive isn’t enough and try to hold out for more.
Whatever their reason is, if you set your expectations appropriately when you put in a purchase offer, it can save you the hurt and frustration of having it rejected.
Remember that it’s common to put in multiple offers on homes before finding someone that will finally accept yours, especially when the market is competitive.
Homebuying can be a rewarding process if you remain patient and work with experienced professionals who can guide you along the way.
Contact Homefinity to connect with one of our experienced loan officers and begin your homebuying process today.