You’ve found the perfect house and you’re ready to write an offer with your Realtor but you are unsure of the process. A Realtor will guide you thru the process but it doesn’t hurt to familiarize yourself with reasons some offers are rejected.
Some buyers believe all sellers are open to negotiating price, conditions and terms of a purchase and sale. However, if the sellers terms are not met, you can expect a rejection of your offer. A counter offer is a rejection of your offer as the sellers terms were not met the first time around. Sometimes buyers know why their offer was rejected and other times they are left feeling confused and defeated.
The purchase and sale agreements are composed of several components. You may be focusing on purchase price, but there are other components to the offer that could be more important to the seller. A seller may not like some of your terms and conditions as well. The negotiation process can become stressful with both the seller and buyer trying to protect their best interests.
Low ball offer
If the buyer is offering too low a price they may insult the seller and risk losing the property. If you’ve looked at many homes and you finally found the right one, it might be worth offering a few thousand more dollars.
The buyer should understand the homes current market value and current real estate market conditions. Negotiate purchase price on fair market value and don’t assume the seller is desperate to sell. In a sellers’ market don’t expect a big discount on price. There are many buyers waiting in line for a good property and are willing to pay more and forego certain terms and conditions.
Not preapproved for mortgage
Do yourself a good service by getting preapproved for a mortgage before you start viewing properties. Most sellers expect that the buyer has been preapproved for a mortgage before placing an offer on their home.
A preapproval is a preliminary review of your credit, income and assets showing the maximum mortgage amount a buyer is approved for. Sellers want to be assured the buyer can close on the sale of their home in a timely manner.
Small Deposit
The deposit shows the seller you are serious about completing the sale. Buyers usually give a 3-5% deposit towards the purchase price. Sellers will not want to take their home off the market with a small deposit or no deposit at all.
Closing Date
The closing date is when the buyer takes possession of the home. If possible have your Realtor reach out to the selling party to see what timeframe is preferred by them to vacate.
Seller may be waiting for a solid offer on their home before viewing and purchasing another, in which case a short close is not favorable. If you are purchasing a home in a competitive market it might be wise to accommodate the seller’s preferred closing date.
Deadlines on contingencies and conditions
Deadlines on contingencies and conditions are important. You are asking the seller to remove their property from the market and risk losing other qualified buyers. Don’t drag out deadlines as this could lead to wasted time and disappointment.
Give yourself adequate time to get mortgage approval so you don’t have to ask for an extension on the deadlines. Remember, in a seller’s market the longer the contingency the more likely you could lose the property to another buyer.
A home inspection is an important part of the home buying process. However, you don’t need several weeks to complete the inspection and review the reports and/or obtain estimates for repairs.
Competing against multiple offers
The last couple of years we have had a sellers’ market. In a seller’s market you could potentially be one of many buyers presenting an offer. Your offer gets declined when a competing offer has a better price, and or terms and conditions.
Inclusions and Exclusions
The listing cut mentions inclusions and exclusions in the sale like kitchen appliances and or washer and dryers. If there are items you want like garage door openers or certain fixtures make sure to include them in your offer. Never assume items are included such as pool cleaning equipment. Asking for personal items like furniture or décor could be a source of discord for the seller and certainly offend the seller.
Buying a house can be an extremely exciting time for you but it can also be very stressful. It is important to be prepared and educated about the home buying process.
