This BLOG On Purchase Offer Rejected By Sellers On Homes And Reasons Why Was UPDATED On April 29th, 2019

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
• Many mortgage bankers like myself now specialize in mortgage loan programs with no overlays
• 580 credit scores will qualify a home buyer for a 3.5% down payment FHA home purchase mortgage loan
• Home buyers with a prior bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale can now qualify for a mortgage loan after passing the mandatory waiting period
• Gustan Cho Associates Mortgage Group has launched NON-QM Loans and Bank Statement Loans For Self Employed Borrowers
• 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
• 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 to purchase and getting 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
• Sellers does not even counter the purchase offer
• Sellers often 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 the reason for the home seller to think that the home buyer is just low balling them
• Low ball offers are viewed negatively by sellers and seller do 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. Buyers should be represented by a professional experienced realtor who can convey to the seller’s realtor that buyer is a strong buyer and are serious in a purchase offer. Buyers should be armed with a solid pre-approval letter that has been fully underwritten and signed off by a mortgage underwriter and not loan officer. A loan officer should never sign off on a pre-approval letter. All of our pre-approvals at Gustan Cho Associates Mortgage Group are loan commitments that has been fully underwritten and signed off by our mortgage underwriters. With our pre-approval letters,  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
• 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 listing agent will want to get their own buyer so they can keep the 6% sales commission instead of splitting 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 necessarily 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 goes a long way
• The sellers’ side need to be convinced that there will be no glitches with the home buyer and the buyer’s lender
• 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 borrowers
• FHA loans used to be very strict in the past
• 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 buyers can close the home early. But offer them a leaseback where they can stay and pay your rent if the subject property is hot and have multiple offers.

• Also, offering a larger than usual earnest money deposit
• Large earnest money 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

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