Mortgages

How To Respectfully Decline A Bid

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 4 minute read

Buying a home is a highly stressful endeavor. Improving your credit, being pre-approved for a mortgage, finding the perfect real estate agent, and seeing potential homes are all part of the process.

Unfortunately, the difficulties don’t end there: even if you discover the perfect home and make an offer, the seller may still reject it. Sometimes people turn you down without giving you any sort of reason.

Sellers might decline bids for a wide variety of reasons. Possible causes of your house auction loss are discussed below.

Reasons Why Your Home Purchase Offer Is Rejected

  1. Inadequate Funds Prevent a Purchase

Avoid homes that are out of your price range if you want to buy a property. Talk to your real estate agent about a budget, and if they continue to show you properties that are out of your price range, politely tell them to stop. Why risk falling in love with a house you can’t afford only to torment yourself?

After touring more expensive houses that provide more space, better schools, and other perks, you may find that homes in your price range seem less appealing. If you’re looking to buy a more costly house, you might be tempted to submit a low offer in the hopes of convincing the seller to lower the price.

Offers like this may be offensive and wasteful. On top of that, sellers have costs they need to cover out of the money they get from the sale. Their real estate agent’s commission, the current mortgage, and a down payment all need to be saved up for.

Submitting a bid that is significantly lower than the asking price (usually 25% or more) increases the likelihood of an outright rejection. Always keep in mind the following rule of thumb: never bid on a home that you cannot afford.

  1. There is a better offer on the table.

There might be many bids on the table for the seller if their home has attracted a lot of interest. Given the impossibility of knowing how much other bidders may offer, it’s best to keep your bid as close to the asking amount as feasible. Don’t ever assume that other bidders won’t outbid you; even if they have, a single bid that’s just a little bit higher might still cause you to lose the deal.

A superior real estate offer goes beyond just the price, though. When considering whether or not to accept an offer, the seller takes many additional variables into account. He could even take a lower offer than yours. Simply put, the successful bidder did not include a laundry list of conditions in his bid as you did.

The inclusion of certain conditions in a purchase offer is common practice. However, the seller may reject your offer regardless of its price if you want too many concessions in the form of waived conditions, such as the payment of closing expenses, unneeded repairs, new appliances, and new carpet.

  1. You have not been approved for a mortgage.

Both you and the house sellers are likely to experience stress throughout this procedure. They are naturally wary of accepting bids only to find that the successful bidder doesn’t meet the financial requirements for a loan.

As a result, many vendors are picky and will only entertain offers from those who have already been accepted for a mortgage. Similarly, the seller may reject your offer without giving a reason if you haven’t met with a lender or if you don’t provide your pre-approval letter.

There are several advantages to having pre-approval: Not only will this get you in the door with potential sellers, but it will also give you an idea of how much house you can afford before you ever start looking. A lender will decide your eligibility for a house loan and the loan amount after you submit an application, tax records, and your most recent income statements.

  1. You Need a Long Escrow

Your real estate offer may be rejected if you ask for a lengthy escrow period. Maybe you need a few extra months to save for a down payment, or maybe you just need to list your current home on the market for a while. Whatever the case may be, most sellers like to move quickly.

Whether they’re just ready to move on with their lives or have to sell soon due to circumstances like a divorce, sickness, job loss, or relocation, it’s safe to assume that they’re motivated to do so. The seller may choose to accept another offer if your closing takes longer than 30 days.

Bottom Line

Putting less emphasis on yourself will enhance the likelihood that your offer will be accepted. I get that you’re interested in saving money by purchasing a home. However, keep in mind that you and the vendor aren’t the only ones engaged. If you put yourself in the seller’s shoes, you’ll be able to make an offer they can’t reject.

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