Rejected offers can cause homebuyers considerable disappointment and enormous heartache. If you've found the home of your dreams, and you've made 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.
- If your home purchase offer was rejected, it was likely for a reason involving money.
- Your offer price may have been too low or too high, or they may have simply received a better offer.
- Other reasons could include the listing agreement commission structure, specific contract requirements, or personal reasons.
1. Your Price Was Too Low
Sellers aren't required to respond to offers that are less than the 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 gone on the market, and almost certainly won't consider them if they've received multiple offers.
2. Your Price Was Too High
This is 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 again.
4. There's a Variable Commission Structure
One 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.
Ask your agent to check MLS to see whether 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. 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.
It can be as simple as the seller wanting a lender's pre-approval letter. Many do—they want at least some assurance that you're qualified for financing, so get pre-approved.
Loan pre-approval 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.
Don't let your agent sabotage your chances from the get-go. If it was not the price that got your offer rejected, often it was 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.
Frequently Asked Questions (FAQs)
If my offer was rejected, how long should I wait to make another offer?
A rejected offer doesn't necessarily mean you can't still get the house. If you have the luxury of waiting, you can see whether the house stays on the market for another month or two. The seller might be more inclined to accept a new offer after it has been on the market for a while.
Does the seller have to provide a reason for rejecting your offer?
Sellers aren't required to provide a reason when they reject your offer. However, if they provide a counteroffer, whatever they didn't like about your original offer should be fairly clear.
Can you negotiate with a seller who rejected your offer?
If a seller rejects your offer without a counteroffer, you can still attempt to negotiate with them. If they rejected it outright, they might have been offended by your original offer. You might have to do some investigating with your agent to try to figure out why your original offer was rejected, so you can put together a new offer that has a better chance of success.