6 Reasons Why Sellers Reject Buyer Offers

If you’ve submitted an offer on a home that you fell in love with after viewing several properties, it can be pretty disheartening to have it rejected by the seller.

Why would the seller completely take your offer off the table without even bothering to counter it? What was it about your purchase offer that prompted the seller to refuse to negotiate?

As it turns out, there are several reasons why sellers reject offers from buyers, including the following.

1. Your Offer Was Too Low

One of the more obvious reasons why the seller may have turned down your offer is because your offer price was simply too low. If the seller believes you “lowballed” them with an offer that was way below their asking price, they may have been insulted to the point that they refused to even counter the offer. It’s not uncommon for so-called lowball offers to offend homeowners who have an emotional connection to their property.

There may be different reasons why your offer was far less than the listing price. For instance, maybe the asking price was a lot higher than what the current market dictates, and your offer reflected a more accurate price point. Or perhaps the listing price was fair, but you were either unaware of this fact or simply wanted to try your hand at a much lower price to get a significant discount. Whatever the reason for your low offer, the seller may have been put off enough to throw your offer out completely.

Perhaps the seller was not offended, but simply received a higher offer from another buyer. If that’s the case, the seller has the right to reject your offer (as long as they did not sign back on it) and entertain a higher offer from another interested party.

Whatever the case may be, a low offer price is one of the most common reasons why buyers’ offers are rejected by sellers.

2. Your Earnest Money Deposit Was Too Low

Not only is the dollar figure of your offer price important, but so is your deposit. The amount of money you offer up-front in the form of an earnest money deposit has a huge influence on sellers. It tells them that you have the funds necessary to afford the home and will be more likely to get approved for a mortgage to close the deal.

It also shows sellers that you are serious about buying and are expressing this level of seriousness by offering a large portion of the purchase price right out of the gates. This is important because if the deal falls through as a result of a default on your part, you stand to lose that deposit money.

A common reason why an offer is rejected is because the buyer was only offering a small earnest money deposit. Strong earnest money deposits are those that are between  2% to 5% of the listing price, depending on the area and the current market. For instance, a deposit of $15,000 would be considered strong if the asking price for the property is $500,000 (which would make the deposit 3% of the asking price), while a $5,000 deposit for the same home would be considered weak.

A low deposit amount will tell the seller that you’re not a serious buyer or you don’t have the financial means to make the purchase (or both). As such, the seller may toss your offer out without even considering it.

3. You Included Too Many Contingencies

As a buyer, it’s strongly recommended that you include a few contingencies in your offer in an effort to protect yourself. Certain contingencies are very common, such as those that allow buyers time to secure financing, conduct a home inspection, and review HOA documents (if applicable). Without these contingencies, buyers could be left in a precarious position.

That said, it’s possible for an offer to have far too many contingencies which end up dragging out escrow as each contingency needs to be fulfilled. To a seller, a contingency represents a degree of doubt. If all the contingencies are not satisfied within the specified time frames, the deal can fall through, leaving the seller scrambling to relist the property and find another willing buyer.

If your offer is filled with contingencies, that could be a good reason why the seller may have rejected it.

4. Your Closing Date Didn’t Work For the Seller

Among other components in a purchase offer, the closing date is one that can be negotiated among buyers and sellers. If the closing date you want doesn’t work for the seller, they could reject your offer.

While the average closing date is around 60 days, there’s really no precise time frame for buying and selling a home. You could offer a very reasonable amount of time to close, but if that doesn’t work for the seller, that could be the factor that kills the deal. For instance, if the seller has already bought a home that closes in a couple of weeks, they may want a very short closing that you just can’t offer them.

Ideally, you should find out what type of closing date the seller is able to work with before even looking at the home and submitting an offer. If, for instance, the seller needs a quick closing, submitting an offer with a 60-day closing is pointless.

On the flip side, if you write an offer with an extremely long closing date that will drag escrow out for weeks, your offer may not look as attractive to the seller. Whether it’s because you still need to sell your own home or need some time to accumulate a hefty down payment, asking for more time than what is expected could be a turn-off for the seller who may have a problem with a long drawn-out escrow period.

If the timing to close isn’t desirable for the seller, you stand a chance of having your offer rejected.

5. You Were Not Pre-Approved For a Mortgage

The majority sellers prefer to work with buyers who have already taken steps to get pre-approved for a home loan. Without a pre-approval letter, your offer may not have much to stand on.

Being pre-approved shows the seller that you are serious about buying and stand a better chance of getting approved for a mortgage. In fact, you won’t truly know how much you can afford in a home purchase if you don’t get pre-approved before the house-hunting process starts. If you’re not pre-approved, sellers will likely weed you out and focus on buyers who have already taken that crucial step.

6. The Seller is Impossible to Please

You may have drafted up a solid purchase offer with a high offer price and deposit amount, and it might also come with minimal contingencies and be submitted along with a pre-approval letter. But if the seller is extremely unreasonable and tough to please, there may be little you can do about it.

Some sellers might not have realistic expectations about what the current market dictates and might want far more than what their home is worth. They may be extremely inflexible when it comes to closing dates. Whatever they’re reason for being difficult, you could be faced with a rejected offer regardless of how you draft it.

The Bottom Line

As discouraging as it is to have your offer turned down by the seller, knowing why it was rejected can help you make sense of the situation. Understanding the reasons why your offer was turned down can help you go in with a more solid offer if you choose to have another go at the same property. If not, using what you’ve learned from one offer situation can help you go into another offer better prepared.