Why was my offer not accepted although it was higher than list price?

Why was my offer not accepted by the seller even though we offered higher than the list price?

In my neck of the woods in Alameda , Oakland and Piedmont CA, we’ve had listings during which the winning buyers were not always those who wrote the highest offers.

This is not unusual. Buyers who track the progress of sold properties on which they submitted offers are very surprised when they found out they wrote higher offers but lost anyway.

NOTE:  List price should NOT be the sole basis of  your offer. List price is all part of the pricing strategy -- some agents list less than market value in order to stimulate a bidding situation.

So what are some of the reasons why the highest offer doesn’t always win? 

Take a close look at the details of your offer. Highest price alone doesn’t guarantee the offer is the best one, especially in a competitive situation where there are several offers on the table.

Initial deposit	You submitted less than 1% of the offer price as your initial deposit. The higher the better. The higher initial deposit shows seriousness on the part of the buyer to commit resources to complete the transaction. It also shows how much buyer is willing to risk.
Down payment	Are you getting an FHA loan? This may not be as attractive to sellers who are receiving offers for cash or conventional loan. In short sales, negotiators typically want 30 days or less to close escrow from the time they grant approval. Some FHA lenders may need longer than 30 days which could put the short sale transaction in jeopardy
Escrow period	Sellers are in a hurry to close (heck, they’ve already moved) but you want an escrow period longer than 30 days
Buyer investigation period	It’s a competitive situation, but you still specified 17 days to do your inspections. Most realtors can find you inspectors who can get there sooner. And typically, buyers will know from the results of the inspections whether they want to move forward or not. And if you decide to back out, the sooner you back out, the sooner the seller can put the property back on the market.
Pest Inspection mentioned in the contract	You asked the seller to pay for your inspections. And you specified wood-destroying organism/pest inspections. Didn’t you and your realtor know that this raises a huge RED  flag among loan underwriters who may insist that Section 1 items of the pest report are cleared/repaired/replaced before they approve the loan? Most seller will NOT agree to this up front.
Escrow fees and closing costs	You asked seller to pay for your escrow fees and closing costs. Do you know how much your escrow fees and closing costs are, and is it worth losing out on this sale for that amount?
City and county transfer taxes	It’s best to go with what’s customary in your area. Most sellers will accept that condition. But if you ask the seller to pay for all of these, then you might as well just move on to your next offer.
Repairs and credits	If it's an AS IS  sale (typical of short sale or bank-owned listings), it's NOT  a good idea to asl for repairs/credits in the offer before it is accepted and before you even have inspections done. You can wait to ask for it later, depending on the degree and amount of repairs that must be done, and assuming you’re still willing to move forward.
HOA fees where applicable	Sellers will normally pay for the cost of getting the HOA documents/ And they are also responsible for keeping up with the HOA payments. But transferring the HOA membership from theirs to the new buyer is typically borne by the buyer. This is a minor issue, but could be an irritant if the buyer asks for seller to pay for all HOA-related items.
What stays with the house	The MLS usually states what the seller is willing to leave behind. But you asked for the sun and the moon, including some of the seller’s personal property.
Short sale specifics	Most short sale listing agents want total commitment from the buyer to stick it out, and will ask buyer to open escrow upon acceptance by the seller and before receipt of short sale approval longer waiting period But you don’t want to commit, and didn’t do either one. Whereas your competition did. So which buyer do you think the seller would believe more?

Other REALTORs will surely weigh in on more reasons why some offers are rejected by the seller, even when such offers at first glance appear to be decent (but not the best) offers.