I was recently contacted by an agent who submitted a full price offer on one of my listings and their client wanted to know why their offer wasn't accepted.
It is important for buyers to understand a full price offer doesn't mean the seller will pick their offer or has to pick their offer. While a seller may initially focus on price there are so many other terms in a contract that can easily be a deal breaker, like a request for seller concessions, little or no money down in escrow or a non-negotiable close date that doesn't work for the sellers.
When I sit down with a client to write an offer we discuss ALL the terms of the offer, not just the price. These other terms that are often times discounted or brushed off include the following:
Financing: Are you paying cash or getting financing? Prior to writing an offer you should know whether or not you're going to pay cash or what type of loan program you're going going with.
Closing Costs: Are you asking the seller to contribute towards your closing costs? Offering full price and asking for a 3% seller contribution is technically not a full price offer to the seller. While you are paying full price, the seller will not be netting the full price. If the asking price is $200,000 and you offer $200,000 with a 3% seller contribution the seller is actually netting $194,000, NOT $200,000. If you need seller concessions know how much, don't put 6% and only need 3% because that additional 3% could make a huge difference.
Escrow: How much are you putting in escrow and when?
Closing Date: When do you want to close and is this date flexible? If the property you want to purchase is a short sale make sure your closing date is VERY flexible because approval could come at any minute and you will most likely be given 30 days to close from approval date. Unfortunately the bank is not going to care that your lease isn't up for another 90 days and give you an extension for that amount of time.
Contingencies: What type of contingencies and when do the contingency periods end? Common contingencies include inspection and mortgage.
My goal as a REALTOR® is to educate my clients about ALL the terms of their offer and NOT focus solely on price because in a multiple situation those terms can become VERY important and crucial.
Price is a big factor, but there are other pieces to the puzzle!
If you are looking to purchase a home in Wellington Florida contact us today!
Originally posted http://wellingtonhometeam.com/what-do-you-mean-my-full-price-offer-wasnt-accepted/
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Good post Michelle. That is a topic that I have been planning to write on too. The offered price is only one part of the deal, lots of other things go into making a great offer.
Persaonally, I think it goes beyond the asking price, property and the price point to know what to offer and how to offer it. These methods are standard solutions, each has to be based on its own merit.
Michelle: The terms versus price concept is often confusing for buyers. Going above full price for a financed buyer can get rejected because the listing agent and seller may feel that the appraisal won't come in arrising in complications as well. There are many things to consider when sellers get ready to choose an offer when there are multipule offers to choose. Great post Michelle, and I suggested it.
I am working with a buyer that offered $10,000 over list price and didn't get the house!
I love where we are going with this market, and it's about time that the balance of power has shifted. Sellers are starting to see light at the end of the tunnel.
There is always a reason if a "full price offer" is not accepted. And these are some good ones.
Great explanation there. There are often alot of misunderstandings in real estate terms and conditions until broken down in bite-size digestable explanation like you shared. Great job!
Michelle, I had an offer over the list price rejected on a foreclosure. Come to find out there was an even larger all cash offer(mine was all cash also).
In the current marketplace here in Sacramento, it is not uncommon to receive multiple offers on the same property. Often those offers may be above asking price. Competition, and as you say, "the other things" in the offer can make the difference.
What a way to "break" it down and keep it simple. I thoroughly enjoyed this post.
Michelle, like you said, there are many possible reasons that sellers don't accept a "full price" offer. I've had the pleasure of explaining that offer ing $1 over listing price, and asking for concessions, is not offering "over" listing price.
I just shake my head that agents don't understand this. Consumers... I get, but why can't their agent explain it to them.... some folks shouldn't have a license.
Michelle: Recently I received 24 offers on a property and one was 150k over the list price (and market value) but was subject to appraisal. Different strokes for different folks but the seller accepted an offer at market value from a buyer putting down 50% with an 800 credit score. Safe seemed to be the way to go. Great idea for a blog post and congrats on the feature.
Michelle -- It is certainly not all about the price. Terms are extremely important and it's the agent's duty to educate the client. I am still so surprised by how many agents and sellers do not understand concessions. Excellent post.
Michelle, a post well worthy of the star. Sometimes highest price, even if it's over asking isn't necessarily the best price. The contingencies are usually the deal breakers
Great post Michelle. We have had several listings recently that received multiple contracts. Buyers need to be educated...so they don't loose a deal! ::)
Michelle this is an excellent post. These are pointers a buyers agent should discuss with a potential buyer especially in a market of multiple offers.
Its hard to get a full price offer through how things are going in my area now. It almost has to be over the list price.
Many very good points are made in your post. I also let my buyers know that a seller never has to accept any offer nor give a reason why he/she/they rejected the offer.
Michelle -- so many reasons why an offer will not be accepted --- full price, all cash, no contingencies, over list price --- it is a very interesting time in real estate. Congrats on the feature.
Of course the the full price offer is rejected, if you demand $30,000 worth of silly contingencies, it really is no longer a full price offer.
I am disappointed in how many agents get bent out of shape over a low offer, yet expect the seller to allow all sorts of contingencies, including expecting the seller to pay for all the stuff found in an inspection. I guess its a way for them to collect a commission on the value of the home plus the value of the potential repairs that the seller must make to get that full price offer.
Full price will rarely get the property in my market. Properties are flying off the shelves with multiple offers. Heck we paid 20% over asking price for our house in 2010.
Hi Michelle,
I will join the crowd.
Applauding wildly.
(Can you hear it?)
Phil
Like you say Michelle, it all depends on the contingencies, the situation of the listing, etc. We know the market and we can educate our buyers about a good offer with a high possibility of success. Whether or not they listen, is another story.
Good post Michelle. I agree - the terms are sometimes more important than the offer.
Jim - Yes there are
Winston - It does go behind the price
Jane - Yes, full price or above doesn't always get accepted
Kathy - I know this happens a lot in our area especially with all the cash buyers we have.
Larry - Me too!
Jane - Yes there are
Loreena - Thanks
Cheryl - Yes they can
Mike - I know it happens
Myrl - Yes they do
Robert - Thanks
Eric - Unfortunately a lot of buyers don't understand that
Tammy - Me too
Melissa - WOW, 24 offers? That's amazing and I can tell you most sellers would do the exact same thing as your clients, in my opinion it's the smart move.
Barbara - Me too
Ed - No it's not
Joy - I agree
Jennifer - Yes they should and unfortunately I think a lot just fill them in without explaining.
Karen - So do I
Chuck - Sometimes that's the case here too
Mike - Thank you
Michael - Yes it is and thank you
Bob - Never looked at it that way
Bryant - That's amazing and in my opinion a great sign.
Phil - Thanks!
Gabe - Yes it does
Herman - Thank you
Good points. It is all about the price AND the terms. Many times buyers do not take sellers closing cost in consideration and etc.
The buyer shouldn't have to ask, the counter should inform them.