There are a variety of reasons that buyers’ home purchase offers are not accepted. The price, of course, is the most common reason. But, it may be worthwhile to consider other factors that may be involved. Here are a few tips on how to avoid another rejection and increase your odds of getting your purchase offer accepted.
A Seller’s Emotions Get in the Way
Many of the other factors related to the seller’s emotional reaction to their interpretation of the offer(s) they receive from the buyer(s). For example, often a buyer will include a family photo or personal letter explaining how much they love the home and the reasons why it’s such a good fit for their family. Many sellers are influenced by the emotional connection they sense the buyer has made with the property and can envision them making it their home.
Don’t Delay Too Long
Often a potential buyer inadvertently raises an uneasy feeling of uncertainty in the seller’s minds when they ask for customary periods of time for removing various contingencies in their purchase process. Of course, nearly all buyers are encouraged by their agents to include certain contingency time periods for their own protection.
However, in the current market environment investors or developers have been making a significant number of purchases every month and their offers generally have either no inspection contingency period or at most, a very short period, and usually their proposals are on an all-cash basis with relatively fast escrows. Thus the average buyer is at an inherent disadvantage when contingencies are included in their offers, especially if they are not offering to pay at least as much as the all-cash buyer. In fact, more than 25% of the local purchases of homes have been to investor-type buyers since 2013.
How Buyers Can Compete with All-Cash Bidders
For buyers who need to compete with the all-cash bidders, it’s essential to do their homework and get a lender to pre-approve the necessary financing amount. Full pre-approval is much more certain than the most typical “pre-qualification” that most buyers receive in order to present an offer to purchase.
The full process requires that the potential borrower gives the lender copies of 2 years of tax returns, has their credit(s) checked, verifies current income and available liquid assets, and answers any specific questions the underwriter may ask in order to be given pre-approval of the loan. Then the lender will wait to receive a copy of the accepted purchase offer (hopefully soon) and the preliminary title report on the property, so they can schedule an appraisal and be ready to issue loan documents shortly thereafter.
Be Sure to Include your Contingencies
The absence of any financial issues in the purchase contract is a great comfort to the seller. I have often seen perfectly well-qualified and capable buyers lose out to an investor’s all-cash bid simply because the “regular” buyer had not obtained full loan approval and asked for 17-30 days for that as a contingency.
The Highest Bidder Usually Triumphs, But Not Always
A higher price that a potential buyer is willing to pay will in most cases trump emotional appeals such as family photos or personal letters. However, sometimes a buyer with a totally “clean” offer will feel safer to a seller than will another buyer who offers more money but has longer contingency periods or perhaps a more difficult loan to obtain.
Michael Edlen has been involved in nearly 3,000 contract negotiations and counseled nearly 500 buyers in their successful purchases of homes. Having been ranked among the top 100 agents in the country, he and his team are available for buyer consultation appointments and glad to share lessons and tips that may be helpful to buyers achieving their goal.