Why the Seller Rejected your Reasonable Offer?

Why the Seller Rejected your Reasonable Offer?

I work with lots of Home Buyers in Brentwood CA and the East Contra Costa Communities of Antioch, Oakley, Discovery Bay, Pittsburg, and of course the balance of the East Bay Area.

I see many Home Buyers come into this Hot Sellers Market and even Balanced Markets trying to save a few dollars on the home. Now I cannot blame them for that, we all want to save money and get the best deal we can. However, this effort to chisel a few extra bucks out of the Home Sellers may backfire.

Now as a Home Buyer you may come in well qualified and can certainly afford the home. After some back and forth maybe the seller has given some on the price and provided for some favorable conditions for the seller. But you are stuck say at $5,000.00 apart and the seller will not budge. On a $400,000.00 this $5,000.00 seems like a small thing, it is less than 1.5% of the purchase price.

But what does the seller think?:

• Perhaps you have tried the poverty approach to the purchase. You provided a pre-qualification letter for the amount of your offer; showing that is all you can afford. Also the Proof of Funds in your one bank account you showed them shows just enough for the down payment and closing cost. The message conveyed to the seller either at the beginning or at this point in the negotiations is, “This is all I can afford.”
  Now right off the bat in a buyers market I have had this work to get some good deals for a buyer. But let's be realistic. In a more balanced market (and especially a sellers market) you are going to get rejected right off the bat for a better offer. And even if at that point you are the highest offer on the table they may be willing to wait; as they don't want to risk taking an offer from such a marginal buyer that may run into problems in escrow.

• That's right in this market it is best to show you can easily afford the home and are buying something under your maximum purchasing power. Of course once you show you can easily afford the home the seller will see less reason to give into price reductions.

• Now if I am the seller and I know the home is priced fairly and you are trying to get that last bit of money out me (when you can easily afford where we are at) I have to wonder how much trouble you will be during escrow and inspections. I think inspections are important and you need to do an inspection to find any major issues or potential problems. However, any good home inspector is going to find some problem. Sad to say there are some sleazy agents and inspectors that try to make more out of inspection problems than there really is. They magnify problems and write over blown estimates for repair; all in an attempt to get the price lowered or get credits. If I am the seller I do not want to deal with anyone who I think might nickle and dime me through the escrow and inspection period.

• Now this one is the kicker. The buyer might see the amount of money they are fighting over as very minor compared to the entire sales price, often less than 1 or 2%. But the seller is not looking so much at the selling price as his or her net from the sale. That's right it might be a $400,000.00 home, but $5,000.00 after paying off mortgages, liens, sales expenses, and other bills you are unaware off may be 5, 10, 20% or more of what they plan to net. It is a more significant amount to them than to you.

I love to negotiate a great price for my buyers, but I also hate to see my buyers loose the home of their dreams when they could have easily had it over a minor amount of money (and yes I see it happen). Just a little insight into the other guys shoes.

Home Point Real Estate is located in Brentwood Ca and provides service to the East Contra Costa County Communities of Brentwood, Oakley, Discovery Bay, Antioch, Pittsburg and beyond. Give us call regarding Buying a Home, Selling a Home, or Real Estate Investing.