Many homebuyers assume that if they make an offer at or above asking price, their offer will be accepted. So of course, they're shocked if their offer is rejected! How could that happen?
The Pittsburgh housing marketing is more competitive than ever. Many homes are receiving multiple offers. That means there are many factors besides asking price that sellers can consider.
Remember, the seller wants more than just to sell their house. They want an easy, stress-free process. They also want to make sure their home will be well-loved by the next owner. So while making a higher offer helps, it doesn't guarantee you'll get the house.
Here are some of the reasons your offer may - or may not - be accepted.
Pre-Approval
Sellers want to move fast, and they want a guarantee that you'll have money. If they accept your offer but find out later you don't actually have the funds, they will have missed out on other offers. In this market, buyers should have a mortgage pre-approval, not just pre-qualification, in hand before making offers. Without pre-approval, the seller may reject your offer regardless of the price.
Before starting the homebuying process, your agent should help you make sure you're prepared to act fast and make a good offer. Here are the ways we make sure our clients are ready to start the homebuying process.
Contingencies
Sellers don't want to feel like their hands are tied. So if you have a contingency in your offer - like needing to sell your own home before closing - they may reject your offer.
There are some standard contingencies, like a home inspection, that you should almost never waive. Your agent will help you determine what is reasonable to include in your offer, and what might hurt your chances of being accepted.
Seller Concessions
Sometimes, buyers request that the seller pay for closing costs. This can be a great negotiating tactic if the home has been on the market for a while or hasn't been receiving offers. But if the home is getting multiple offers, the seller has no reason to agree to cover closing costs.
Your agent will advise you on whether or not asking for closing costs is in your best interest.
Escrow
An escrow deposit is also known as an "earnest money" deposit. This is an amount of money buyers put into an escrow account after the seller accepts their offer. This up-front money usually ranges from 3 to 10 percent of the value of the house. But it's important to the seller because it's cash down on their property, and it shows you're serious about the property.
The good news is that this money is applied toward the balance of the down payment. And, if the offer falls through, you can usually get this money back. Just be cautious - you can lose the escrow deposit if you sign that you are approved for a loan but get denied, or if you decide not to buy the property without a valid reason.
Closing Date
Some sellers want to move as soon as possible. Others have to find a home to move into before they can close. The seller will look for someone whose timeline fits with their own. So if the buyer's desired closing date is too soon or not soon enough, the seller may reject the offer.
You may not have control over your timeline, but if you can be flexible, let the seller know.
Offer Letter
An offer letter is a brief description of your interest in buying the house. It should include some basic transactional information: your offered price, timeline, and details about financing. But the agents at Harvest have found that a good offer letter also explains why you want this property, and why you're the right choice.
If a seller receives two offers that are basically identical, they might choose based on emotional reasons, like having something in common with one buyer. So if you tour a home and notice memorabilia from your own alma mater, mention that connection in your offer letter. If you grew up in the neighborhood, or intend to raise a family there, let the seller know. You don't need to tug at their heartstrings, but you should show them that their home will be loved and appreciated by you. Just know that sellers are not allowed to discriminate on the basis of gender, age, income, religion, ethnicity, or ability.
What to Do if Your Offer is Rejected
Of course, even if you put your best foot forward, the seller may still reject your offer. If your offer is rejected, ask if the seller has made a counteroffer, such as a higher price or increasing the size of the earnest money deposit. Decide if you can actually offer the seller more, or if you'd be giving up too much. Talk to your agent about other concessions that could strengthen your offer.
If the seller has already accepted an offer, ask if they will accept your offer as a backup. If the original offer falls through, you will be next in line. Do not count on this happening though, as these cases are rare.
And finally, move on. If you've followed Harvest's golden rule, you won't have fallen in love with this property before your offer was accepted! If you've lost this offer, your agent will be ready to show you other homes that will make you just as happy.