Is a Home Seller Required to Accept a Full-Price Offer?
Home sellers aren’t obligated to accept any offer on their home—no matter how much money it’s for. There may be other offers on the table or, in some cases, they may want to hold out for more money. In these cases, a seller may reject an offer, even if it’s at or above their asking price.
This has consequences for the seller, buyer, and any real estate agents involved in the transaction, and sellers should carefully consider the repercussions before rejecting a full-price offer.
Why Sellers May Reject an Offer
Some home sellers who receive a full-price offer immediately feel regret. Did they under-price their home? Should they hold out for more money?
This sticky situation can apply to all kinds of sellers in every market across the U.S. If you find yourself wrestling with a similar predicament, it pays to work with an experienced real estate agent to make sure that you don't miss out on a potential buyer. You also want to ensure that, in the process of trying to negotiate, you don't end up creating a legal issue for yourself.
An Example Scenario
Let's say a couple lists their home for $325,000. For three months, they don't get any offers, not even a lowball offer. After three months without action, they finally receive a full-price offer for $325,000. However, in those three months since the house went on the market, the sellers feel like real estate in their area has heated up considerably. Nearby homes seem to be selling for 10 times what they're worth.
Now their real estate agent is pushing them to accept the offer of $325,000, but the sellers want to counter offer at $340,000. Their agent is reluctant, which is making the couple confused and angry. They thought that agents were supposed to get the highest possible price for them, and they worry they're leaving money on the table by accepting this offer.
The Number of Offers Matters
The key detail to take away from the example scenario is that the sellers received just one offer on their home. In seller's markets, it's normal to receive multiple offers, if you are selling a highly desirable home. Multiple offers can create competition among potential buyers, possibly leading to a bidding war that pushes the price well beyond the original listing.
When a seller has received only one offer, they have less leverage. To raise the price on the one buyer who is willing and able to buy the home may mean losing the sale altogether. It may come with legal and ethical ramifications as well.
Check Your Broker Agreement
Though you aren't legally required to accept any full-price offer, if you’re using a real estate agent, you could still be on the hook for their commission. In some states, when a seller receives a full-price offer from a qualified buyer, it means the real estate brokerage has earned the commission. If you reject the full-price offer, you might still owe the brokerage that fee for successfully securing the offer.
You may still owe your agent a commission if you reject a full-price offer. In the brokerage's eyes, it has performed the task it set out to do—find a buyer who's willing to pay full-price for the home—and it expects to be paid accordingly.
Be sure to check your listing agreement, because it may contain verbiage that says the seller cannot reject a full-price offer. Moreover, the multiple listing service (MLS) where the listing is published might have its own rules for offers as well. Northern California's MetroList MLS, for example, has rules that say if a seller receives a full-price offer and rejects that offer, the agent must either raise the sales price in the MLS or note in the confidential agent remarks that the seller rejected a full-price offer.
A rejected offer note in MLS would probably stop other agents from recommending the home to their buyer. Further, it can be considered misleading advertising if a seller advertises that a home is available to buy at $325,000, but they actually want $340,000. If you want $340,000 for your home, you need to advertise your home at $340,000.
What a Rejected Offer Means for Buyers
If you, as a homebuyer, submit an at-listing offer, there’s a chance it could be rejected. This might happen if there are other bids on the table, if the seller’s situation has changed (making them less motivated to sell), or if they think their home is now worth more than they originally listed it for.
Whatever the reason, you have a few options. You can:
- Come back with a higher bid
- Consider other methods of negotiation (waiving contingencies, for example)
- Move on from the property
While neither is ideal, you can’t force a seller to accept an offer. You can, however, continue watching the listing. If they’re unable to secure a higher offer, there’s a chance they’ll reduce the price down the line.
The Bottom Line
Full-price offers aren't always enough, and sellers may reject them in hopes of getting more cash with a different buyer. When this occurs, there may be financial repercussions with the listing agent, and it could impact the marketability of the home with other buyers.
Texas REALTORS. "True or False? A Seller Always Has to Accept a Full-price Offer." Accessed Dec. 10, 2019.
New York State Office of General Counsel. "Defining When a Real Estate Broker's Commission Is Due." Accessed Dec. 10, 2019.
Metrolist MLS. "Summary of Changes to Metrolist Rules," Page 25. Accessed Dec. 10, 2019.