Why was my offer rejected though it was higher than list price?

Real Estate Agent with Alain Pinel BRE 01367196

Why was my offer not accepted by the seller even though we offered higher than the list price?Missing piece

In my neck of the woods in Alameda , Oakland and Piedmont CA, we’ve had listings during which the winning buyers were not always those who wrote the highest offers.

This is not unusual. Buyers who track the progress of sold properties on which they submitted offers are very surprised when they found out they wrote higher offers but lost anyway.

NOTE:  List price should NOT be the sole basis of  your offer. List price is all part of the pricing strategy -- some agents list less than market value in order to stimulate a bidding situation.

So what are some of the reasons why the highest offer doesn’t always win? 

Take a close look at the details of your offer. Highest price alone doesn’t guarantee the offer is the best one, especially in a competitive situation where there are several offers on the table.

First and foremost, ask

What does the seller want?

Initial deposit You submitted less than 1% of the offer price as your initial deposit.

The higher the better. The higher initial deposit shows seriousness on the part of the buyer to commit resources to complete the transaction. It also shows how much buyer is willing to risk.
Down payment

Are you getting an FHA loan? This may not be as attractive to sellers who are receiving offers for cash or conventional loan.

In short sales, negotiators typically want 30 days or less to close escrow from the time they grant approval. Some FHA lenders may need longer than 30 days which could put the short sale transaction in jeopardy

Escrow period

Sellers are in a hurry to close (heck, they’ve already moved) but you want an escrow period longer than 30 days.

Conversely, seller may have wanted to wait a little longer or even a rent back. But you wanted them out sooner than when they're ready. Did the seller have a contingency to find a replacement property?

Buyer investigation period It’s a competitive situation, but you still specified 17 days to do your inspections. Most realtors can find you inspectors who can get there sooner. And typically, buyers will know from the results of the inspections whether they want to move forward or not. And if you decide to back out, the sooner you back out, the sooner the seller can put the property back on the market.
Pest Inspection mentioned in the contract You asked the seller to pay for your inspections. And you specified wood-destroying organism/pest inspections. Didn’t you and your realtor know that this raises a huge RED  flag among loan underwriters who may insist that Section 1 items of the pest report are cleared/repaired/replaced before they approve the loan?

Most seller will NOT agree to this up front.
Escrow fees and closing costs
You asked seller to pay for your escrow fees and closing costs. Do you know how much your escrow fees and closing costs are, and is it worth losing out on this sale for that amount?
City and county transfer taxes It’s best to go with what’s customary in your area. Most sellers will accept that condition. But if you ask the seller to pay for all of these, then you might as well just move on to your next offer.
Repairs and credits

If it's an AS IS  sale (typical of short sale or bank-owned listings), it's NOT  a good idea to ask for repairs/credits in the offer before it is accepted and before you even have inspections done. You can wait to ask for it later, depending on the degree and amount of repairs that must be done, and assuming you’re still willing to move forward.

HOA fees where applicable Sellers will normally pay for the cost of getting the HOA documents/ And they are also responsible for keeping up with the HOA payments.

But transferring the HOA membership from theirs to the new buyer is typically borne by the buyer. This is a minor issue, but could be an irritant if the buyer asks for seller to pay for all HOA-related items.
What stays with the house The MLS usually states what the seller is willing to leave behind.

But you asked for the sun and the moon, including some of the seller’s personal property.
Short sale specifics Most short sale listing agents want total commitment from the buyer to stick it out, and will ask buyer to
  • open escrow upon acceptance by the seller and before receipt of short sale approval
  • longer waiting period

But you don’t want to commit, and didn’t do either one. Whereas your competition did. So which buyer do you think the seller would believe more?

Other REALTORs will surely weigh in on more reasons why some offers are rejected by the seller, even when such offers at first glance appear to be decent (but not the best) offers.

What does the seller want?


Re-Bloggged 8 times:

Re-Blogged By Re-Blogged At
  1. Carla Harbert 05/28/2012 01:06 PM
  2. Carla Muss-Jacobs, Principal Broker/Owner 05/29/2012 01:17 PM
  3. Judi K Barrett 05/29/2012 05:41 PM
  4. John Elwell 05/29/2012 07:33 PM
  5. Cheryl Ritchie 05/29/2012 09:54 PM
  6. DeeDee Riley 05/29/2012 11:50 PM
  7. Ron Chastain 05/31/2012 06:28 AM
  8. Sharon Alters 06/02/2012 03:24 PM
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Comments 41 New Comment

Pacita Dimacali
Alameda/Contra Costa Counties CA
Alain Pinel

Evelyn --- to help our clients, it helps to research the challenge, starting by asking questions about the seller's situation and preferences.

Cheryl -- and of course, there are situations where you simply can't win, as when the seller wants to sell to a member of the family or circle of friends, but felt he still needed to advertise it for sale

Praful -- so many examples of when money didn't talk

Bob -- in several cases, we didn't take offers that were so high they couldn't possibly appraise. As such, buyers may ask for price reduction or even back out. There are times when terms, conditions and intent play a bigger part in getting accepted.

DeeDee - thanks for the compliment

The Christiansens --- Glad you found this helpful.

May 31, 2012 12:42 AM
Pacita Dimacali
Alameda/Contra Costa Counties CA
Alain Pinel

Phil -- like you said, if you ask for too much, you won't get the deal. There is such a thing as moderation.

Elizabeth -- short sales require even more of an understanding in what motivates the seller (and the agent). Obviously our hope is to find the best possible offer with the highest probability of getting approved.

Rob -- it always surprises me when people make a decision based on something that may not have mattered to others but it does to them. And that's what's important to understand and accept

Kathy -- all the pieces have to fit. Absolutely!

May 31, 2012 12:45 AM
Ron Chastain
What ever it takes
Keller Williams Realty Atlanta Partners

Excellent post ... thanks for sharing!

May 31, 2012 06:22 AM
Sharon Alters
Your Fleming Island Relocation Agents.
Coldwell Banker Vanguard Realty

Pacita, until all 200,000+ members have read and commented, this hasn't been properly circulated. SUPERB!!!!!


June 02, 2012 03:23 PM
Pacita Dimacali
Alameda/Contra Costa Counties CA
Alain Pinel

Ron -- thanks for your kind words

Frank and Sharon -- how so very nice of you to think that way. Glad you found this helpful

June 02, 2012 09:30 PM

Pacita Dimacali

Alameda/Contra Costa Counties CA
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