After weeks or months of searching, you’ve finally found your ideal house. When you make an offer, you picture yourself eating supper in the dining room or lounging by the pool. Maybe the home is just minutes away from transit and amenities, like the luxury homes featured here.
When the property checks off a lot of boxes for you, it may shatter your hopes when you receive news that your offer has been rejected by the sellers.
When it comes to real estate, conventional wisdom is that the highest bid wins. But this isn’t always the case. Sure, every seller wants to see a secure offer, but savvy realtors will remind them that each offer is more than simply a figure; it is the sum of all its components.
In this article, we will take a deeper look at why the highest offer might not always get the house and what you can do about it.
5 Reasons Why The Highest Offer May Not Win
Here are five reasons why your lesser offer could win over the higher one.
Timing is first and foremost among potential deal-breakers. Sellers consider the offer clauses in the context of their unique circumstances. If they require more than 30 days to move out, and someone is pressing them to do so sooner, it might be a turnoff if they haven’t yet found a new place to live.
The sellers may have already departed the property and are anxious to sell it as soon as possible. As a result, tailoring the closing date to fit the demands of the sellers may be more important than the bottom line. Have your real estate agent find out necessary details about the sellers’ preferred closing situation so that you can more easily meet those needs in your offer.
Low-ball bids are a typical cause for the rejection of purchase agreements in real estate. However, you’ll almost always win out over a higher-priced offer if you can pay cash. It may seem challenging to make such a large purchase without taking out a loan, but some individuals are able to do so. Cash offers are frequently the most attractive, as long as they come in close to the asking price.
An all-cash offer ensures that there will be no financial roadblocks to finalizing the purchase. An appraisal is required when financing a house through a lending institution, and this procedure can lengthen the closing time frame to accommodate scheduling and paperwork. As a result, if you decide to finance yourself, it may expedite and simplify the process for the seller.
A seller may reject your purchase proposal if you don’t have a pre-approval or a pre-qualification letter. If you plan on financing a property in this market, you must be pre-approved. A pre-approval letter is a proof from your mortgage broker or bank that you’re ready to buy within a specific price range and have been pre-approved for a mortgage.
When there are so many potential buyers, sellers don’t want to waste their time with someone who can’t afford their house. As mortgages are becoming more challenging to come by these days, the pre-approval letter is an effective tool in ensuring your offer is more attractive. Other buyers may make a higher offer, but if they aren’t pre-approved, you may have an advantage.
Contingencies are specific criteria that must be satisfied in a sales agreement before the process can be finalized.
With contingencies, a seller’s degree of uncertainty increases. If a purchase offer has several conditions, a seller has every reason to be worried about whether the deal will close. The inspection, financing, and appraisal are the most frequent contingencies. Sellers do not want their properties to languish on the market for an indefinite period.
They also don’t want to relist their house because the transaction fell through due to a condition. Each demand you include has the potential to make your offer appear weaker since it makes the sale that much more difficult. Before including any contingencies in your offer, make sure they are necessary.
You’re Asking For Too Many Things
A buyer’s request for things not mentioned in the transaction is another typical reason for rejecting a purchase proposal. The sellers may turn you down if you ask for the customized draperies, Smeg appliances, and a Scandinavian hot tub with the house. If the sellers said that the chandelier was not included in the listing, don’t expect them to toss it in.
You may believe that your higher offer covers all of the expenses. But if you want the property, proceed with caution. If it appears like you’re attempting to get as much money as possible from the sellers, you risk upsetting them.
What To Do If The Offer Is Turned Down?
If your offer is turned down, you have two options: make a new offer and pursue the house further, or move your search elsewhere.
Make changes where possible and fair, but don’t go too far. Remember, you still have to keep your commitments. If you increase your offer by $100,000 but can’t back it up, the deal will fail.
Consider including a personal letter to underline why you’re the best person to buy the house. You may have already included a pre-approval letter from your lender, but a personal letter might be more powerful. If you have any more information that the seller should know, please share it!
Always keep in mind that no matter how much you love a place, there’s a risk it won’t work out. Sometimes you just have to walk away.
The search for the perfect home is simply one aspect of the home-buying process. Making an offer is a crucial stage in the process. A buyer may have to make numerous tries and have several bids rejected before getting one approved. It’s critical to understand the most common causes and how to avoid them.
Make sure your real estate agent has done their homework and understands the sellers’ position, as well as what’s included and what’s not, before submitting a purchase offer.