Home Buying Offers:  Common Reasons For Rejection

1. The Home Offer Is Too Low: This is one of the primary reasons why home offers get rejected. Prospective home buyers make the rookie mistake of just throwing out a figure to see what the seller will expect. If your offer is way below the expected market value of the home, you may end up having your offer rejected straight away. Prior to making an offer you must put some thought into it. Check what the average prices of properties in that suburb or area are and then compare it to the asking price of the seller.
2. Emotions:  Once you make a low ball offer on a property which is way below the asking price of the seller, in a lot of instances the seller may feel offended. This gives rise to issues of credibility where the seller starts feeling that you may either not be good for the money judging from your offer on a home or that you feel the sellers property is not worth as much. Either way you do not want negative emotions associated with the purchase or sale of the property as this will eventually lead to the falling through of your offer.
3. Bad Representation: In certain cases your home offer may fall through owing to the fact that your representing real estate agent does not have your best interests in mind. While representing you the same agent may also be representing a competitive buyer and may be undercutting you owing to the fact that he/she is getting a higher commission slice from the other party. Another instance may be where the real estate agent severely lacks social skills and offends either the seller or the seller’s agent. Either way it would give rise to a situation where you end up losing the property.
4. Buyer Did Not Match The Seller’s Criteria: The crux to this situation is a severe break down in communication. A buyer can never know what the seller’s criteria is unless the question has been asked. The seller may have several issues like: wanting a cash deposit, having concerns about the conditions of the house, or may even want to see the buyers’ pre-approval letter etc. Unless you clarify exactly what the seller’s criteria is you can never be sure how to go about getting around pleasing the seller.

In addition to the above mentioned reasons, a very common blunder is where sellers put themselves into a corner by making home offers like “take it or leave it”. This means that you have laid your cards on the table and cannot go any further. While negotiating make sure you use small increments. Never go all in. At the same time do not low ball the seller and remember to make offers on a home which are researched.

You have just found a house, that you feel comfortable with and are ready to make a home offer. You want to be sure that the home offer you make is accepted and at the same time does not stretch you out and offers you room to breathe. The question is, how do you do this? Making an offer on a house can be a tricky. Prior to making an offer on homes. there are a lot of things that you will need to consider and once the offer is made you will also have to prepare to negotiate in the event of a counter offer made by the seller.

Making An Offer On A Home – Considerations

When making an offer on a house, there are certain factors you must taken into consideration in order to ensure you get the best deal.

How Much?

When considering the amount of money to offer a seller, it may be useful to consider some of the below mentioned points:

• Inquire as to what properties in the neighbourhood have sold for or are selling for. This will give you a fair idea of whether the seller is over or under charging.
• While looking at the median of selling property prices, this will also give you an idea of the how hot or cold the market is. If there are a number of sales in the market and in quick succession of each other you will know that you may need to act fast or lose out to a more willing buyer. On the other hand however, if the sales are few and far between it would mean that you have time to bargain.
• Check the interiors of the house to make sure that it doesn’t have any structural or major damages. This would mean you having to mend the house or carry out interior renovations to make it habitable.
• You may also want to check if the house has the additional features that you want. E.g. A lawn or a studio or a granny flat etc.

Having considered the above make sure to check your finances prior to making a home offer.

Contingencies

When making an offer on a house, be sure that you include contingency clauses in your offer. Do not make an unconditional home offer without certain clauses being satisfied, such as, the house passing certain inspection levels, or your application for finance being approved. Usually contingencies have a time frame of 30 days.

Counter Offers On A Home

Now that you have made a home offer, the seller in most circumstances will come back with a counter offer on the home. This is basically where the seller will accept certain terms of the offer and negotiate or want to change other. The biggest haggling point is usually price. Other issues included in a counter offer could include settlement date, contingencies in the contract etc. If the seller is dissatisfied with the price, you could be rest assured that he/she will reject your offer on the spot. The seller may also come back with the counter counter offer. This process will basically continue until a consensus has been reached and the terms are universally acceptable.  Once the terms have been agreed upon, the two parties enter into an unconditional contract that encompasses the agreed terms.

Once a home offer is made, you can retract it right up to the point where the offer is accepted. If it has been accepted, it creates a legal and binding  obligation on both parties and either party breaching could be liable for a law suit and any damages a court may deem fit. Hence prior to making an offer on a house, make sure that you are completely satisfied with all the terms.

References:

1. The Basics of Making an Offer – Realtor.com
2. Making an Offer on a House – NOLO