Why Did the Seller Reject Your Offer?
Why a Seller Might Reject Your Offer
Rejected offers cause homebuyers considerable disappointment and enormous heartache. You've found the home of your dreams and you've put an offer in on it. Your hopes are high, and then—BOOM!
You find out you can't have it. The homeowner doesn't want to sell it to you.
It begs the question: why? What went wrong? Purchase offers are usually rejected for one of four common reasons, and most have dollar signs attached.
Reason #1: Your Price Was Way Too Low
Sellers aren't required to respond to offers that are less-than-list price in most states, but agents are required to deliver them anyway.
The seller might believe that the buyer isn't serious about purchasing the property if the offer is too low-ball. Sellers can easily feel insulted and might be too angry to respond. They'll reject the offer outright with no further discussion.
The seller might also feel that it's too early to look at less-than-list-price offers if the property has just come on the market, and sellers almost certainly won't consider them if they've received multiple offers.
Reason #2: Or It Was Too High
The flip side is offering too much for a home—unless, of course, you're offering cash and you don't mind parting with it.
Most seller's agents will try to dissuade their clients from jumping at such an offer if it's not likely that the property will appraise for that much. The deal will only fall apart when the lender realizes that the loan terms exceed the property's actual value.
Reason #3: There's a Competing Buyer
A little-known practice is the variable or dual-rate commission structure that listing agents sometimes specify and negotiate into listing agreements.
Here's how it works: The listing agent makes an agreement with the seller that if the listing agent ends up also representing the buyer, the listing agent will reduce their commission because they're earning both sides of it.
For example, the listing agent might be charging a traditional real estate commission and is perhaps paying the buyer's broker a bit less. They might agree to knock a percentage point off the commission if they represent both sides of the transaction. This is called a variable rate.
The seller will pay more and net less if your own agent writes the offer, and might therefore reject it.
Ask your agent to check MLS to see if the commission is variable. If so, your agent might be willing to match terms to get you the house.
Reason #4: You Didn't Meet the Seller's Needs
Your agent should always touch base with the listing agent to find out whether the seller has any specific requirements or hot buttons. But sometimes listing agents include helpful hints in the agent remarks portion of the MLS.
In either case, write these concerns into your offer. You might be able to offer a longer closing date if the seller needs a long escrow, or speed up your closing in the opposite situation—the seller is anxious to get this deal done by a certain deadline.
It can be as simple as the seller wanting a lender's preapproval letter. Many do—they want at least some assurance that you're qualified for financing. So get preapproved.
Loan preapproval can benefit you in another way. You'll have a pretty firm idea of how much you can spend on a property, so you won't spin your wheels—and your agent's wheels—looking at and making offers that turn out to be out of your price range.
The problem might have nothing at all to do with your offer. It might be a personality clash. For one reason or another, the seller doesn't particularly like you and doesn't want to hand over a home with tons of good memories tucked between its walls.
It also reflects poorly on you if your agent annoys the seller's agent—especially in a multiple offer situation. There's nothing preventing a listing agent from taking two identical offers to a seller and saying, "I don't like Agent A, but Agent B is professional." Most sellers will choose the offer from Agent B.
Agents without manners are wasting their time and making their buyers' lives unknowingly miserable. This is a networking business. Being polite and respectful earns kudos many times over.
Don't let your agent sabotage your chances from the get-go. If it's not the price that got your offer rejected, often it's the agent.
The Bottom Line—Something Is Probably Wrong
It's uncommon for a seller to simply reject an offer outright without making a counteroffer that tells you exactly what they do want. Something has most likely gone seriously wrong if you don't get one.
Go over your offer again—and take a good, hard look at your agent—to avoid making the same mistake the second time around.
National Association of Realtors. "Code of Ethics and Standards of Practice of the National Association of Realtors," Page 2. Accessed Oct. 5, 2020.