If you’ve had a home purchase offer turned down or are ready to submit a home purchase offer to a seller, you should know there are common reasons why these are rejected. In some instances, it’s a case of cold feet, the seller simply isn’t ready to go through with the transaction. In others, it’s circumstances beyond the seller’s control, or, just a matter of personal quirks. These scenarios are more rare, but do happen from time to time. There are more realistic reasons why sellers turn down home purchase offers, though.
Why do Sellers Turn Down Home Purchase Offers?
When you submit an offer on a home, it will have certain, important contingencies. These are commonplace in the residential real estate market; and, are designed to protect your interests. If you’ve done all the necessary preparatory work, like saving a down payment, fixing errors on your credit report, and, putting money aside for inspections, moving expenses, and closing costs, you’re probably ready to start touring homes.
Once you’ve decided on the home you want to buy, your real estate agent or attorney will draft a purchase offer in your name. The offer is submitted to the seller’s agent, or directly to the seller when it’s a “for sale by owner” (FSBO) listing. The seller can respond in one of three ways: accept the offer, counter the offer, or reject it. —Home Finder
This can be an exciting yet frustrating time because you’ll look at dozens and dozens of listings online, narrowing them down to ones you want to see in person. Then, you’ll tour home after home, tweaking your must-have and wish list items along the way. Eventually, you’ll find a house you like and then, you’ll have to submit an offer to the seller. When you do, it might lead to a rejection, and here are some reasons why sellers turn down home purchase offers:
- A better offer is tendered. When you submit an offer, there’s a time-frame involved in which the seller can either accept or reject it. If you put-in a home purchase offer but another comes-in that is for more money, has a short escrow time period, or a combination, the seller can accept it and reject yours.
- There’s a long escrow request. If you need time to sell your current home or are relocating from another state, you might submit a purchase offer with a longer escrow period. While this is understandable, the seller could be anxious and turn down the request, along with your offer.
- The purchase offer price is low. Some buyers choose to submit a low purchase price, thinking this tactic will get the seller to drop the price significantly. In an active real estate market, like here in Orlando, that strategy is very likely to backfire and lead to an offer rejection.
- You don’t have mortgage pre-approval. There’s a really big difference between a mortgage pre-qualification and a home loan pre-approval. The former is a quick, cursory “okay” by a lender which doesn’t involve a detailed look at your finances and credit. The latter is detailed and gives sellers more peace-of-mind.
- There are too many offer contingencies. Every home purchase offer contains at least some buyer contingencies. These are clauses which are put in-place to protect the buyer from purchasing buyer’s remorse with a money pit. Should these be too numerous or strict, the seller might turn down the purchase offer.
One more reason why sellers turn down a home purchase offer is due to a minimal earnest money deposit or good faith deposit. Sellers regard a small earnest money deposit as something that’s unserious and a little too cautious. If you are ready to buy a home and want to make the best impression while getting a good price, contact an experienced real estate professional today to discuss your options.