Purchase Offer Rejected
The housing market has recovered in the past two years and it seems like it will continue to recover. Real estate values have steadily been climbing in most parts of the country. Homeowners who had underwater mortgages are now on the market to sell. Mortgage lenders have lightened up on their mortgage lending guidelines and many mortgage bankers like myself now specialize in mortgage loan programs with no overlays. 580 FICO credit scores will qualify a home buyer for a 3.5% down payment FHA home purchase mortgage loan. Home buyers with prior bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale can now qualify for a mortgage loan after passing the mandatory waiting period. Home buyers with prior bad credit and open collection accounts can qualify for a mortgage loan without needing to pay off or satisfy old collection accounts. Medical collections are often ignored by mortgage lenders. Many pre-approved home buyers are facing homes they are interested in putting an offer in but many of these homes have multiple purchase offers. Many of my pre-approved home buyers are getting their purchase offer rejected and facing competition on homes they want to make offers in. It takes weeks, if not months finding the right home that you like to purchase and getting your purchase offer rejected can be a major disappointment and disheartening.
Reasons Why Purchase Offer Rejected
One of the most common reasons why a purchase offer is turned down or rejected is because the home buyer offers a low ball offer. The home seller gets insulted and does not even counter the purchase offer and think that the home buyer is not a serious home buyer. Nothing is wrong with writing a purchase offer lower than the asking price, however, coming in at a value that is 20% or more less than the purchase price can be reason for the home seller to think that the home buyer is just low balling them and not take the purchase offer seriously and not even counter offer. If the home is just listed and fresh on the market, the seller may not even take an offer less than the asking price. Sellers are not regulated like realtors and mortgage bankers so home sellers do not have to respond to any offers than the asking market listed price of their home.
Home buyers should be armed with a strong pre-approval and be represented by a professional experienced realtor who can convey to the seller’s realtor that you are a strong buyer and are serious in your purchase offer and that the home will close in a short period of time.
Listing Agent Want To Get His Or Her Own Buyer
Home sellers need to pay a 6% real estate commission on a sales transaction. That 6% commission gets split between the buyers realtor and sellers realtor. Although it may seem unethical but it is not illegal, many sellers realtors, or listing agents, want to gobble up the whole 6% sales commission and can do so if they get their own buyer. It is common sense that if you were a listing agent, you will want to get your own buyer so you can keep the 6% sales commission instead of spliting it with a different realtor. By law, the listing agent needs to present all offers to the home seller, whether it is the listing agent’s offer or an offer by another real estate agent. More so than not, the listing agent will be pushing more on his or her own buyer than another realtor’s offer.
Cash Offers And No Mortgage Contingency Buyers Will Get Preference
Cash offer home buyers or home buyers with no mortgage contingencies will get preference over home buyers who request a finance contingency and home inspection contingencies. Home sellers do not necessary go with the highest purchase offer. The home seller needs to feel comfortable with the home buyers. A strong pre-approval and a call to the home buyer’s lender where the mortgage lender makes the sellers realtor feel very confident that there will be no glitches with the home buyer will go a long way. Sometimes the home seller may want to speak directly with the home buyer’s mortgage loan officer. Some home sellers do not like home buyers who are FHA loan borrowers. FHA loans used to be very strict in the past but now, FHA loans are much more lenient and easier to get qualified than conventional loans.
Ways Of Avoiding Purchase Offer Rejected
Try to work with the seller where you can close the home early but offer them a leaseback where they can stay and pay you rent if the subject property is hot and have multiple offers. Also, offering a larger than usual earnest money deposit shows strength and seriousness. If there are minor repairs to be done after the home inspection and those repairs need to be done to have the appraisal pass inspection, offer to the sellers that you will absorb the cost of the needed necessary repairs and purchase the property as is.
Related> Is your offer rejected?