Home Buying in 92591>Question Details

Lardassdjm, Home Buyer in 95348

under what conditions would the highest offer not be accepted on the purchase of a home?

Asked by Lardassdjm, 95348 Wed Aug 12, 2009

I have made offers on homes in the Merced area for the past 4 months. All kinds of sales from reo to seller owned. i have made offers for higher than the list price and still have not had one accepted. one of the offers i made was for 30K over the list price of 200K. it got accepted as the backup offer. when i was browsing the real estate section of recently sold homes the paper had 10K BELOW the listing price as the selling price for this house. my broker told me it did not sell for cash. why and under what conditions could this happen?

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Jesse makes a good point below. It is really important to use an agent who understands this market. Some banks take HIGHEST and BEST and some just take HIGHEST. Feel free to contact me with any question.
2 votes Thank Flag Link Thu Aug 26, 2010
This is a common problem in our current market. There are very few listings and many buyers are now bidding over asking prices. Many banks are onto the trick many buyers are using where they are bidding way over asking and then hoping the bank will then reduce the price when the home does not appraise. This is frustrating for the seller because many times they have solid buyers with higher down payments or cash offers they turn away to accept another offer from a buyer that has no intention of paying the price they originally offered. If the home does not appraise, the buyer will request a modification in price and if the seller refuses, the buyer will back out of the deal. Often times this is many days into the escrow and it is time lost for the seller.

Many asset managers are now asking agents to request that the buyer remove the appraisal contingencies in these offers or show that they have funds to bring in the difference in the event the home does not appraise.

There are many other factors that can cause a seller to choose a lower priced offer (terms, down payment, escrow period, etc.) but choosing the strongest buyer and avoiding lost time due to accepting offers with no intention of purchasing the home for the price actually offered is the primary reason in my opinion.
1 vote Thank Flag Link Thu Jan 21, 2010
You have received lots of great input as to why a "higher" purchase offer may not be accepted. Another thought to consider, try asking the listing agent: "what would your seller like to see in an ideal offer?" I would encourage you to check in with your agent to see if they are posing that question. You may not always get a straightforward answer and particularly with bank owned properties it might not be a viable option, but in many cases, it is and the response might help you to position your offer in the best light.

Regarding the sale price, the recorded sale price does not always reflect what the buyer "paid." For example, I recently sold a home where the buyer purchased the home for less than asking in exchange for the buyer paid the seller's total commissions obligation separately.

Keep pushing forward.

Best regards,
April Tavares
Realtor, DRE License #01742179
April@AprilTavares.com
Web Reference: http://www.AprilTavares.com
1 vote Thank Flag Link Wed Aug 12, 2009
I might depend on the other conditions of your offer:
Is the offer contingent upon a home inspection? Maybe the accepted offer did depend on passing an inspection
(You could protect yourself by doing the inspection before you write the offer)
Is the offer contingent upon attorney approval? (You could have your attorney approve your offer prior to submitting it)
Is the closing date appealing to the Seller? You could indicate that your closing date is flexible.
What are the financial qualifications of the Buyer--maybe the other Buyers proved their qualifications beyond a shadow of a doubt.

These are common items of importance to a Seller.

Sandy Tower, Dickerson Nieman Realtors, Rockford, IL
Web Reference: http://www.sandytower.com
1 vote Thank Flag Link Wed Aug 12, 2009
Many situations could apply to the reason why. As said it very likely that the terms of the financing were better. I know it is frustrating but it is happening to everyone so just be patient and push through it. It does not matter what the listing price is, what matters are the comps. Some listing prices are way below what they should be so always price according to the comps. If you put an offer than might not be supported with comps, that could be another reason. For example you offered 320,000 but the comps reflected a price at 310,000, that could also make them pass on you. Bottom line is it needs to appraise for what you offer. The biggest problem I am having is the cash buyers. I have had cash accepted over a conventional loan with the person having ficos in the 800's when my buyers offer was much better. On that thought have your realtor also submit your ficos whether they ask or not IF your ficos are good. They stronger you look the seller the better chance you have usually!
Web Reference: http://www.di4homes.com
1 vote Thank Flag Link Wed Aug 12, 2009
Perhaps, you need to readjust your offer making strategy.
0 votes Thank Flag Link Thu Aug 26, 2010
I have worked with sellers in multiple offer situations in which they did not accept the highest offer. There are many factors involved, but in my case, the lower price offer netted them out better and quicker. It just depends on the seller and their needs.


Good Luck!
Web Reference: http://www.abemills.com
0 votes Thank Flag Link Wed Aug 12, 2009
True records of sales in county tax office or if posted correctly in MLS.

If you have home equity usually can cause bidding wars, cash offers can be lower however could in some instances accepted over lender .

Work with agent determine all why's

GOOD LUCK...

National Featured Realtor and Consultant, Mortgage Loan Officer, Credit Repair Lecturer
Follow me on Twitter: http://twitter.com/Lynn911
Lynn911
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Wed Aug 12, 2009
Hi Lardassdjm,

The highest offer may not have the best terms. You would think that all else being equal cash would trump financing. Unfortunately, lack of complete transparency around transactions and the inherent conflict of dual agency may affect the outcome of an offer.

Richard Greenwood MBA, GRI,ePro,Realtor
http://HiddenMarketRealty.com
Web Reference: http://Twealtor.com
0 votes Thank Flag Link Wed Aug 12, 2009
Some possibilities are that the other offer was submitted with a larger down payment, such as a conventional loan with 20% down or the other borrower could have had better credit scores, or better debt to income ratios. The banks look at all of that and the underwriters even look at the job stability of the borrower. If you are in a profession that could have layoffs or are self employed that can be a factor. I know it is frustrating but keep trying. Good luck to you!
Web Reference: http://www.soreal.biz
0 votes Thank Flag Link Wed Aug 12, 2009
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