You found a house you love and want to make an offer. You discuss price, terms, etc., with your Realtor, write the offer, and mentally start making plans for the future.
The next day, your Realtor tells you another offer was more favorable, and you lost the house.
What went wrong?
You may be shocked, disappointed, or angry. A number of details could have prevented your offer from being accepted. Following are five reasons your offer might be declined.
The amount offered was too low
While it's understandable you want to purchase the house at the best (aka lowest) price, the seller wants to get the highest price possible, usually with the least amount of time on the market. In a hot market, it isn't realistic to low-ball your offer. If an offer is too low, the seller might be insulted and not even consider your offer. Your buyers agent will prepare a market analysis (CMA) to determine the value of the house. Use the CMA to determine a reasonable offer on the house of your dreams.
Terms weren't acceptable
Besides price, other terms like closing costs, prepaid items, inspection contingencies, contingency on the sale of another property, etc., are a consideration. The stipulation of certain conditions can make your offer less attractive.
No loan commitment from a reputable lender
Before you begin your home search, and certainly before making an offer to purchase, meet with a qualified, reputable lender to determine what you can afford. The lender will determine your purchasing power based on your income, credit, and down payment, among other factors. All lenders are NOT created equal. Get a recommendation from your buyers representative to ensure your lender is knowledgeable in your area, familiar with local regulations, and well respected.
Another offer was more favorable
It's possible that another offer was submitted after yours that the seller accepted or countered. Even if your offer was submitted first, the seller is still free to accept or review other offers until the time you have a signed, sealed, delivered contract. Many buyers don't understand that the seller is within their rights to do this.
An unacceptable closing date
In most cases, though not all, the seller wants to close as soon as possible. If the house is vacant, they probably wanted to close yesterday. If you can set the closing date to accomodate the seller, that may make your offer more appealing than a lengthy due diligence period.
On the other hand, a delayed closing might be more favorable. I ask the listing agent the sellers' preference before submitting the offer. The answer could make the difference between an accepted or rejected offer.
There are other reasons your offer might be rejected. Discuss all the terms and conditions of your offer with your Realtor. Be realistic and consider our expert advice.
If you have questions about the home buying process, I'm happy to meet with you.
Image courtesy of Stuart Miles at FreeDigitalPhotos.net