Why was my offer rejected though it was higher than list price?

Real Estate Agent with Alain Pinel BRE 01367196

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

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.

First and foremost, ask

What does the seller want?


Initial deposit/

Earnest Money


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 that can have a minimum of 3.5% down payment? This may not be as attractive to sellers who are receiving offers for cash or conventional loan.

In a competitive situation, 20% down payment is the least the seller may want because it provides an insight to the buyers' financial wherewithal and ability to close the sale transaction.

Note: 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.

Conversely, seller may have wanted to wait a little longer or even a rent back. But you wanted them out sooner than when they're ready. Did the seller have a contingency to find a replacement property?

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 sellers 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 ask 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.

There is also the subject of point of sale requirements to meet local ordinances such as sewer lateral test/replacement. Most sellers would rather not do anything more to the property. As such it will make the buyers' offer more attractive to the sellers if the buyers will assume reponsibility to do what is necessary to comply with those ordinances.

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

In the listing published in the MLS (multiple listing service), it 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.

What does the seller want?



Re-Blogged 8 times:

Re-Blogged By Re-Blogged At
  1. Carla Harbert 05/28/2012 06:06 AM
  2. Carla Muss-Jacobs, RETIRED 05/29/2012 06:17 AM
  3. 1 ~Judi & Don Barrett & Chassy Eastep - Integrity 05/29/2012 10:41 AM
  4. John Elwell 05/29/2012 12:33 PM
  5. Cheryl Ritchie 05/29/2012 02:54 PM
  6. DeeDee Riley 05/29/2012 04:50 PM
  7. Ron Chastain 05/30/2012 11:28 PM
  8. Sharon Alters 06/02/2012 08:24 AM
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Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Judi --- thanks....having represented buyers who lose out on deals because they didn't listen, I wanted to enumerate the reasons why they didn't get their offers accepted.

Erica --- that's another reason :)

May 29, 2012 11:34 AM #22
Jane Peters
Home Jane Realty - Los Angeles, CA
Connecting you to the L.A. real estate market

Great post Pacita.  It is a little different in your neck of the woods in that, anything less than 3% down won't work here at all, and 99% of the time we ask for termite inspection and remediation from the seller, even in short sales and REOs.  We expect to get them in a standard sale.  But with all the condiitions asked for above, i am not surprised a buyer is going to end up sorely disappointed.

May 29, 2012 11:51 AM #23
John Elwell
CENTURY 21 Bill Nye Realty, Inc. - Zephyrhills, FL

Yes, buyers fail to realize that there is more to an offer than just the sale price. Deposits, closing dates, demands for closing costs, repair limits, or just plain buyer likeability play roles.

I have had sellers pick buyers who were offering less just because both wives were into quilting and the seller wife knew that the buyer wife would enjoy and preserve her special craft room.

In the end, buyers just have to realize that sometimes there are multiple offers and that means that one buyer will get the home and the others will not. Nothing personal, just accept it and move on. Almost invariably, the rejected buyers will find a home that they like as much or more than the one they lost. I have seen that happen many times.

May 29, 2012 12:30 PM #24
Karen Feltman
Cedar Rapids/Iowa City, IA KW Legacy Group - Cedar Rapids, IA
Relocation Specialist in Cedar Rapids, Iowa
Terms can be just as important as price! Sometimes timeframes are more important to some sellers. This is a great reference for buyers to consider in putting their best foot forward when they negotiate to purchase their dream home, whether they are in competition or not!
May 29, 2012 12:46 PM #25
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Jane -- as they say, real estate is local. We are in such a competitive environment that it is rightly described as a seller's market in our area. And yes, 3% initial deposit is definitely recommended. But we have some folks who still insist on a token deposit. Go figure.

John -- the chemistry between buyer and seller as well as their agents will play into the equation. The emotional attachment and outreach are so important.

Karen -- that's why we need to know what's important to the seller.

May 29, 2012 01:59 PM #26
Evelyn Kennedy
Alain Pinel Realtors - Alameda, CA
Alameda, Real Estate, Alameda, CA


You ask a very important question when it comes to writing a successful offer.  Pay attention to what the seller wants and try and accommodate the seller as best you can.   It is nice that we are back in a multiple offer situation, but it makes the buyers and their agents  job of writing an acceptable offer harder

May 29, 2012 02:44 PM #27
Cheryl Ritchie
RE/MAX Leading Edge www.GoldenResults.com - Huntingtown, MD
Southern Maryland 301-980-7566
Lots of good points are made here on issues that can make you win or lose!
May 29, 2012 02:51 PM #28
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Pacita, great post and very detailed list of factors that help seller decide what offer to take. After all, money is not everything...

May 29, 2012 03:52 PM #29
Bob Crane
Woodland Management Service / Woodland Real Estate, Keller Williams fox cities - Stevens Point, WI
Forestland Experts! 715-204-9671

Great post Pacita, I would always accept a lower offer over one that is not likely to close or will cost a lot in silly terms. And when I make an offer, I keep it as simple as possible, knowing that smart sellers will accept less if you don't play games or expect them to share your financing risks while other buyers disappear.


May 29, 2012 04:04 PM #30
DeeDee Riley
Lyon Real Estate - El Dorado Hills CA - El Dorado Hills, CA
Realtor - El Dorado Hills & the Surrounding Areas


What an excellent way of presenting these reasons for rejected offers! 

May 29, 2012 04:46 PM #31
Amanda Christiansen
Christiansen Group Realty (260)704-0843 - Fort Wayne, IN
Christiansen Group Realty

Very nice post.  This breaks it down very well.  Thanks for sharing.                                                                                  

May 29, 2012 09:01 PM #32
Phil Leng
Retired - Kirkland, WA
Phil Leng - Retired

Hi Pacita,

The buyers agent represents the buyer and wants to get them the best deal.

But if you ask for too much, you don't get the deal at all.


May 29, 2012 09:22 PM #33
Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents
Lyon Real Estate - Sacramento, CA
Put 40 years of experience to work for you

There are so many reasons, and you've selected many of the most common, Pacita. This is a great post. People get too hung up on price and forget all the other little factors in an offer. I had an offer accepted by a seller the other day simply because the buyer was related to the agent, and the agent lived in that neighborhood. They wanted to live near each other. This was a short sale (of course) and the seller felt this combination and motivation was her best shot at a buyer who would wait for approval.

May 29, 2012 10:34 PM #34
Rob Spinosa
Guaranteed Rate, Marin County, CA - San Anselmo, CA
Vice President of Mortgage Lending, Marin County

Great, comprehensive list.  True to any negotiation, what motivates the other party is vitally important to you.  Find out what that is and offer accordingly.  I love working with clients and their agents in this regard because there are so many variables.

May 29, 2012 10:49 PM #35
Kathy Stoltman
Rockwood Realty - Ventura, CA
Ventura County Real Estate Consultant 805-746-1793

I have this conversation a lot with both buyers and sellers,  the offer is the whole package not just the price.

May 30, 2012 05:26 AM #36
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Evelyn --- to help our clients, it helps to research the challenge, starting by asking questions about the seller's situation and preferences.

Cheryl -- and of course, there are situations where you simply can't win, as when the seller wants to sell to a member of the family or circle of friends, but felt he still needed to advertise it for sale

Praful -- so many examples of when money didn't talk

Bob -- in several cases, we didn't take offers that were so high they couldn't possibly appraise. As such, buyers may ask for price reduction or even back out. There are times when terms, conditions and intent play a bigger part in getting accepted.

DeeDee - thanks for the compliment

The Christiansens --- Glad you found this helpful.

May 30, 2012 05:42 PM #37
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Phil -- like you said, if you ask for too much, you won't get the deal. There is such a thing as moderation.

Elizabeth -- short sales require even more of an understanding in what motivates the seller (and the agent). Obviously our hope is to find the best possible offer with the highest probability of getting approved.

Rob -- it always surprises me when people make a decision based on something that may not have mattered to others but it does to them. And that's what's important to understand and accept

Kathy -- all the pieces have to fit. Absolutely!

May 30, 2012 05:45 PM #38
Ron Chastain
Keller Williams Realty Atlanta Partners - Mc Donough, GA
What ever it takes

Excellent post ... thanks for sharing!

May 30, 2012 11:22 PM #39
Sharon Alters
Coldwell Banker Vanguard Realty - 904-673-2308 - Fleming Island, FL
Realtor - Homes for Sale Fleming Island FL

Pacita, until all 200,000+ members have read and commented, this hasn't been properly circulated. SUPERB!!!!!


Jun 02, 2012 08:23 AM #40
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Ron -- thanks for your kind words

Frank and Sharon -- how so very nice of you to think that way. Glad you found this helpful

Jun 02, 2012 02:30 PM #41
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