Buying a House? Top Reasons Your Offer Won't be Accepted

Kevin Scheiderich
Jan 19, 2018
Home Purchase
Porch PathBlog

Buying a House?  Top Reasons Your Offer Won't be Accepted


There is an unfortunate misconception when it comes to the tenets of house hunting: "If I pay full price, I will get the house."  Sadly, that's not the case at all.

In specific markets where there is a combination of low inventory, high demand, and a booming economy, paying full price or more does not guarantee acceptance of your offer.  In some cases, it won't even be acknowledged.  Why?  Because, believe it or not, it's not always about the money.

Nothing kills an offer faster than a list of contingencies. A contingency is a demand (or at least a request) that means if it isn't accepted then the buyer has the right to pull out of the deal.  Too many of these demands in an offer will force the seller to look elsewhere.

Your real estate agent can give you a realistic idea of whether your requests are valid, or out of line.  The agent, of course, must present whatever offer you want to be drawn up, but if the agent is heartily suggesting you reduce your list of demands, you should listen carefully.

Typical contingencies are already standard and contained in most boilerplate contracts. These usually include a mortgage contingency, stating that if the buyer cannot get approval for the loan, then he has the right to get all deposits back and to cancel the deal.

Another reasonably standard contingency is the inspection contingency.  If the buyer learns that the house needs expensive repairs that he doesn't want to deal with, he has the right to cancel the contract.  In some cases the problems aren't always fixes or repairs; they include issues such as mold or even the presence of radon gas.  Occasionally houses are found to not be up to code.  In these situations, the seller would typically need to assume the financial obligation of remedying all problems before proceeding to escrow.  If for some reason, the seller refuses to, the buyer, of course, has the right to change his mind.

Any contingencies in addition to these might cause the seller to think twice about going forward.  Much depends on how many offers he has to review along with the possible ramifications of either accepting or negotiating each of the additional contingencies.

Some contingencies can be controlled by the buyer or seller, and others by third parties.  One of these requests is relatively common, and frequently a deal-breaker, such as that closing/escrow doesn't occur until the seller finds another house and is ready to move. Unfortunately, it isn't always up to the seller; there are many reasons the seller could run into problems on his end when it comes time to buy his new house, and the most common of which is his lender.  All too often the seller's lender won't do a "bridge loan" (a loan that encompasses two properties but one will be paid off entirely when it sells).  The lender wants the standard down payment, which the seller probably won't have until he has sold the house and received the proceeds.  It's rare to find a lender who will even entertain the idea of a bridge loan.

One other contingency that is becoming more common is the request for seller financing.  More often than not, this "financing" is nothing more than a request to borrow the down payment needed to buy the house.  Unless the seller has already mentioned that some seller financing might be available, these contingencies will usually cause the seller to ignore the offer and not even counter since he already knows the buyer can't proceed without a down payment.

A list of demands that include minuscule details will typically turn a deal into something so unattractive that the seller won't even consider the offer. Things like "repair chipped baseboard" or "paint laundry room pale yellow" will drive most sellers away.  Anything deemed unrealistic, too much of a bother, ridiculously and needlessly expensive, or outright absurd, will almost guarantee a firm and fast rejection.

What are some reasonable contingencies that a seller might readily consider?

If you like their brand-new appliances and ask that they leave them with the house, then this is usually negotiable. Maybe you ask to split the cost of having the driveway repaved.

Contingencies work both ways; it's not at all uncommon for the seller to ask some favors of the buyer. Some of these might be:

•   Leaving items in the garage for later retrieval.

 •  A rent-back option, which means that if the seller can't move out before passing papers, the buyer can allow the seller to stay for a predetermined amount of time by renting back to him.

One contingency that either party can make is the time to close. It usually is stated in most boilerplate contracts that the time is 45 days from having a fully executed Purchase and Sale Agreement. In the majority of sales, this time frame works fine.In other situations, the timing needs to change to accommodate particular timelines. For instance, if the buyer is being forced to relocate (military, executives, etc.), he might need to negotiate a shorter or even longer time to close.  If the seller wants a quick turnover and the buyer needs extra time, this alone could be a deal breaker.

So, how many contingencies are OK? You want to limit them to a bare minimum. The more the seller needs to think about, the more chance you have of losing your dream home. Even though everything in life is supposedly negotiable, that doesn't mean anyone is forced to negotiate.  Look long and hard at your list of demands before presenting it to the seller.

The average seller simply wants to see a contract that outlines how much you want to spend, when you want to close, and where your money is coming from.  Anything over that could be a deal breaker, especially when he might have multiple offers to review.