Why Did the Seller Reject Your Offer?

Common Reasons Behind Rejected Offers

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Rejected offers can cause homebuyers considerable disappointment and enormous heartache. If you've found the home of your dreams and you make an offer, your hopes may be high. Suddenly, you get bad news: The homeowner doesn't want to sell it to you.

It makes you wonder: Why? What went wrong?

Purchase offers are usually rejected for these common reasons, and they often have dollar signs attached.

1. Your Price Was 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 lowball. Sellers can easily feel insulted and may 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.

2. Your Price 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.

3. The Seller Received a Better Offer

In some cases, the seller might simply receive a better offer from another home buyer. It may be for a higher price, have fewer contingencies, or just have better terms than what you're able to offer.

If your offer is rejected because the seller received a better offer, ask your real estate agent what you can do to help make your next offer even stronger—giving you a lower chance of being rejected.

4. There's a Variable Commission Structure

A little-known practice is the dual-rate or variable 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.

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 they may therefore reject it.

Tip

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.

5. 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—if the seller is anxious to get this deal done by a certain deadline.

Increase the deposit, if possible, if the seller wants substantial earnest money. Offer to buy the property "as is" after providing for a home inspection if the seller is concerned about repairs.

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.

Tip

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.

6. Personal Reasons

The problem might have nothing at all to do with your offer—it may be another personal reason. Maybe the seller doesn't feel you're the right fit for their home, which likely holds a lot of sentimental value for them.

It also reflects poorly on you if your buyer's 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.

Tip

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

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 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.