But what if your offer was turned down - Dealing with rejection –

 Question - I’ve made several offers and my offers are always rejected. What can I do?

This is the 7^th in the series of 10 posts about the real estate process from the perspective of the buyer.

Answer – Dr. Phil might say “Get Real!” If you’ve made several offers and all have been rejected, then you

need to look at the strategy that you’ve been using. If you’ve been lowballing all of the offers, shame on you – that boat sailed two years ago. Shame on your Realtor, too, for allow that to happen.  If you’ve made several offers that you and your Realtor felt were good offers but have lost out to other bids, then it’s time to reassess both what you are bidding on, the content of your bids and how aggressive you may have to become to get the house that you want in the current tight market.

It is possible that you’ve been bidding on homes that were at the top end of the range that you can afford, maybe even a little above. Again – get real! That puts you at a disadvantage, because you may not feel comfortable bidding above the asking price or you may have to ask for Seller Concessions at the bid price to help cover your closing costs. Both strategies are likely to fail in a tight market. Sometimes it’s the type of mortgage financing in your bids that may be holding you back. If you are proposing to mortgage through an FHA, VA or USDA program many sellers will perceive that as weaker than someone who is proposing the same offer price but with a conventional mortgage. Your Realtor should have asked the other side every time you failed to win, why they accepted some other offer or why they rejected your offer. They aren’t really required to tell you, but sometimes you’ll get valuable feedback about your offer that can help with future offers.

What you need to understand is that FHA, VA and USDA programs, while great for you, may impose conditions upon the seller that he/she finds onerous. The appraisal visit for those type of mortgage are often called inspections, just because of all of the safety and condition items that they may look for in the house and require he seller to repair or update, prior to approving the mortgage. Some sellers also feel that people who come with these low down payment mortgages probably can’t afford the house or will be a pain to deal with on the appraisal or inspection issues.

In many areas of the country we also see cash buyers (basically investors buying up properties for rental) as a major problem at the low end of the market. It is hard to compete with a guy standing there with cash in hand and often offering to buy without an inspection, when you are going to need the house to pass both the inspection and the appraisal and may need a Seller’s Concession to boot. There is no solution for that competition, other than to keep looking and hope that the house that you want to buy isn’t one that they know about. With home prices rising many investors have headed for the sidelines, because the numbers no longer make investment sense to them.

It also may well be that you really aren’t ready to buy yet. If you don’t have enough money to put out a reasonable down payment (from 5-20% of the purchase price) and you can’t cover the closing costs (about 3-3/5% of the sale price) then you really aren’t ready. You may want to become a homeowner, but you just don’t have the necessary wherewithal yet. That is especially true if you also have credit issues on your record, too.

The newest changes to the mortgage world have created what are called Qualified Mortgages, which is the quaint notion that the borrower has proven a reasonable ability to repay the loan. The lenders get some liability protection if they do the necessary work to qualify your mortgage. Click here for a good read on these new rules and what qualified mortgages are all about. So do some honest soul searching and financial analysis of your position and back off for a while, if you really aren’t ready to buy.

If you are qualified to buy and you are being realistic about what you are trying to buy, then also look at how you are trying to buy. Perhaps you are losing because you are dithering. The current tight market is not one in which you can take a lot of time to think about every house. You need to be ready to act fairly quickly when you see a good house. The longer you equivocate over things the more time you give other potential buyers to swoop in and steal it out from under you. Have your mortgage pre-approval ready. Have your earnest money ready to go. Do as much homework as you can before you get to the house to look, so that you don’t have to do that afterwards. Know what help you’ll need, if anything, with closing costs and how much you’ll be able to put down. Talk to your Realtor about strengthening your offers.

And remember, like that famous line from the Godfather movie –“It’s nothing personal, it’s just business.” Rejections of your offer are not meant to be personal. In most cases the sellers never meet the buyers until they meet at the closing table, so it can’t really be personal – it’s just business. Hopefully some of the suggestions above will help you do that business better and get the house of your dreams.