Rejected Offers
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(In a buyer’s market, there is a surplus of homes on the market, and prices tend to be collectively falling.)
A buyer is at an advantage because not only do they have a variety of homes to choose from, but they are more likely to get a great bargain on a home that would have been more expensive in a booming market.
But in a buyer’s market, like the one we are seeing pretty much throughout the entire United States right now, sellers can be very hard-headed and buyers could be exercising too much free reign, causing many transactions to be canceled and offers to be rejected.
A rejected offer can be very devastating to a buyer, especially if they have their heart set on a home. Many buyers may wonder why their offer was rejected in the first place.
Elizabeth Weintraub of about.com wrote an article on October 30, 2006, “Why was your offer rejected,” that discusses some of the most common reasons as to why sellers reject an offer.
“In the olden days, like before 1990, most offers were presented by the buyer's agent in front of the seller and the listing agent. But today, buyers don't really know what's going on with their offer because common practice calls for the listing agent to present all offers to the seller.”
This leaves the buyer in a position where they may not really know what is going on with the offer and are left to wonder why it was rejected in the end.
One of the most common reasons an offer is rejected is if the buyer offers an amount lower than the listing price. Even in a buyer’s market this can be very insulting to sellers. “If a buyer offers too little, the seller might believe the buyer is not a serious buyer. The seller may be too angry to respond and, therefore, will reject the offer outright. If the house has just come on the market and is a fresh listing, the seller might feel it's too early to look at less-than-list offers. In most states, sellers are not required to respond to offers less-than-list price.”
That is why it is best not to “low-ball” too much, because not only could you end up personally offending the seller, but the deal could be off all together.
Another reason big reason why deals are rejected is if a selling agent is annoying or insults the listing agent. If you are looking into buying a house, be sure that you thoroughly interview your agent first and get good references because you wouldn’t want your offer to get rejected over something you did not even do.
Another common cause of offer rejection is if the listing agent represents a competing buyer.
“A little known practice among consumers is the variable or dual-rate commission agreements that listing agents sometimes specify and negotiate into listing agreements. What this means is the listing agent makes an agreement with the seller that if the listing agent represents the buyer, the listing agent will reduce her commission. For example, if the listing agent is going to receive 7% commission, 4% for listing and 3% that she gives to the selling broker, she might agree to take 6% total if she represents both sides of the transaction. Therefore, if your own agent writes an offer, the seller will pay more and net less.”
The last most common reason that offers are canceled is because the potential buyer did not meet the seller’s specific needs.
“Agents should always call a listing agent to find out if the seller has any specific requirements or hot buttons. If so, write them into the offer. If the seller needs a long escrow, offer a longer closing date. If the seller wants to see a substantial earnest money deposit, increase the deposit. Sometimes the financing terms stated in MLS are not met. For example, if the seller will accept only cash offers, don't expect an offer with FHA terms to get accepted. If the seller is concerned about repairs, offer to buy the property ‘as is,’ after providing for a home inspection.”
These are all things that a seller could have specified, that if not met, could possibly ruin a sale. Make sure you are on the look out for all of these things so that your sale runs smoothly and your offer is not rejected.
