Why Buyers Offers Get Rejected

Why Don’t the Sellers Like my Offer?

The first thing to understand about an offer is that there are many, many components to an offer. Many buyers believe that the only thing that matters is the price. Any experienced listing broker will explain all offers to their their sellers. They will point out the pros and cons of all offers. Price is only one line on a 25 page contract. It is very significant obviously but many times a higher price offer is rejected in favor of a stronger overall contract. This is what often confuses and frustrates buyers. Their buyer agent is not really doing them a favor by not explaining things to them. Especially when we have been in a seller’s market for some time now. Sellers are still pretty much in complete control.

There are way too many scenarios to take into account when writing an offer. There are some important ones that need to be understood buy all buyers. Hopefully if you are a buyer your buyer agent goes over most of them with you when you are making an unreasonable request on a contract. The best way for a buyer to relate is, would you accept the offer that you are about to present to this seller? If the answer is “no” you might want to reconsider what you are putting in the contract. You need to really ask yourself this question in a seller’s market. If the answer to the question is anything but a solid “yes absolutely” there is a good chance the seller will reject your offer. Now buyers shouldn’t give up things that make them feel uncomfortable by any means. If you have a list of demands for a certain house and don’t think it is worth what the sellers are asking any the buyer wants to offer 10% under list price on a home that has only been listed for 2 days, perhaps this is n’t the right home to be making an offer on.

Financing in an offer

When you make your offer in Colorado you tell the seller what type of financing you are going to obtain. The most popular ones are cash, conventional, FHA, VA and other (specify). Now the most powerful one is cash obviously then conventional. The FHA and VA unfortunately make your offer not as strong. So if buyer 1 offers 490k on a 500k listing cash, and buyer 2 offers 485K on the same listing but with an FHA loan, if all other things in the contract are the same or close, the cash offer is the better offer. There is an unknown variable that worries buyers, an FHA loan. This could also hold true for a conventional loan as well. If there are financing contingencies it is another thing that can go wrong. Is it worth it for the sellers to have that extra 5k on a deal that might take their home off the market for a month? Most Realtors would say “nope”. The finance piece is one of the major strengths or weaknesses of an offer. It easy to overcome sometimes by making another part of your offer stronger.

Dates and Deadlines

In the Colorado contract to buy real estate there is what is called the date matrix. This date matrix has a bunch of dates and deadlines. Some of the important ones that can make your offer stronger or weaker are the inspection objection deadline, loan conditions and the closing date. The other dates are important but these are the three that give the buyer the best ability to exit the contract without (usually) the forfeiture of earnest money. The first one, inspection objection deadline, huge, huge deadline. This is where most deals fall out of contract. It is basically a second sitting at the negotiation table. It’s a very important time in the contract. This date should be as soon in the contract as possible and still give the buyer the appropriate amount of time to get all inspections done. Properties in the Denver Foothills need inspections like (but not limited to) well, septic, radon, home and roof sometimes. There are other ones that your Realtor should advise you one. All these inspections take some time but sellers in a sellers market won’t give you more than you need. Remember if you pull out after inspections it not only takes the home off the market for a couple weeks but it also plants a red flag to the next potential buyers. The next date would be the loan conditions. This is pretty far into the contract but an important date. Another easy out for buyers. Not much to explain here. Either you get the loan you want or you bail. The next date that sellers really look at is closing. Keep in mind their view of closing is simple “how long will my home be off the market if the buyer fails to perform”. A six month close in a sellers market is pretty unlikely. Sellers want the transaction to be over fast. Maybe not too fast though because the seller might still need to find a home of their own and get under contract. That is why it is important for the buyer to know if the seller is in the home currently if they are going to make a cash offer with a short close. This short close might not actually be a benefit to the seller.

The idea is for a buyer to understand there is more involved to an offer than price. Although important there are a ton of other factors that go into a solid offer that you truly want to have accepted. You might have no choice but to go the route of an FHA loan, if you do make sure other parts of your contract are solid and appealing to the seller. Make your offer strong and listen to your buyer agent. If they tell you that you are being unreasonable, listen to them, it is their job to tell you things you might not like to hear. Your agents job is to get you in the house you want, if you are serious enough about making an offer that is most likely the home you want.

As usually this is not legal advice just the ramblings of a Realtor in Evergreen, CO and this does not substitute the advice of your current agent or broker or legal advice you should seek from an accountant or an attorney!

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