Why won’t the seller accept my offer? It’s full price….
As a buyer it can be frustrating when a seller rejects, counters, or accepts another offer. To battle this headache here are a couple reasons why your offers are not being accepted.
1. The property is listed below market value.
The list price is not necessarily set at the market value of the property. This is most often seen in REO/Bank owned homes. Asset managers list properties below market value as a way to procure multiple offers. Many times they will then ask for the highest and best offer from each buyer. Buyer’s have to blindly submit their best offer hoping they will beat out the competition.
What’s the remedy?
Have your agent prepare a comparative market analysis so you know what the home should be worth. With your newfound knowledge of the market value you will be able to make a wise decision on if you need to offer over list price. Be careful to stay in your budget as most multiple offer situations carry a lot emotion and brash decisions.
2. You don’t have the right loan.
FHA and even some conventional lenders have pretty strict standards pertaining to the condition of the property. If the appraiser finds a required repair and the seller won’t fix it you may be out of luck. Your offer of $10,000 above the list price won’t matter because your lender will never give you the loan. Also, FHA loans and condos don’t always sit well together and are dependent on multiple factors including the HOA financial statements and owner occupancy rate.
What’s the remedy?
Have a detailed conversation with your lender and real estate agent (at the same time) about the details of your loan and the condition the property needs to be in. Inevitably, your final loan approval will come down to the opinion of the appraiser but some knowledge beforehand will definitely help.
3. You’re asking for too much.
Most buyers have heard of or have knowledge of closing costs. For many, mostly first timers, help is needed in order to cover them. The easy fix is asking the seller to pay for the closing costs but there is a major drawback. Sellers don’t just look at the offer price but what they will net. Take this situation for example.
Buyer A offers $195,000 for a property that is listed at $200,000 without asking for a closing cost concession. The net amount the seller will receive at the close of escrow is $180,000.
Buyer B offers $200,000 for the same property and asks for a 3.5% closing cost concession. The net amount the seller will receive at the close of escrow is $178,000.
Buyer B just lost the house because of his closing cost assistance. Remember, even in non-multiple offer situations the seller will be looking at your net offer.
What’s the remedy?
There are a few options for overcoming your closing cost assistance need.
- Save up. Wait a few months or a year until you can cover your costs.
- Add the closings costs to your offer price. From the example, if you need $5,000 in assistance then up your offer $5,000 so the seller nets the same as a clean traditional offer.
- Move the money around. Some lenders will allow for the down payment to be paid as a gift from a family member. The money you had saved up for a down payment can now be used for your closing costs.
4. You’re not pre-approved.
Aka you’re not serious enough to speak to a lender.
What’s the remedy?
Pre-Approval Blog
Buying a home can be a frustrating thing especially in markets full of REOs and short sales. Do yourself a favor and find a good real estate agent and lender to help guide you through process.
Feel free to contact me with any questions or real estate needs in the Reno and Sparks, NV areas.
The Temporary Payroll Tax Cut, signed by President Obama, didn’t come without compromise. The tax cut is being covered by an increase in “G-fees” or guarantee fees of 10 basis points imposed on all Freddie, Fannie, and FHA loans.
