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A rejected home offer can be heartbreaking to a buyer, but in a multiple offer situation they’re to be expected. They often come down to who makes the highest offer, but there are things you can do to help gain an advantage that don’t involve bidding more. Here are four common reasons for a rejected home offer and strategies to work around them.
1. Not submitting a Verified Approval Letter
A common reason for a rejected home offer is because it doesn’t include a Verified Approval Letter. A Verified Approval Letter states how much a lender may approve you for on a mortgage. They can increase confidence in your bid because mortgage companies only provide them after verifying information such as your income and assets. Without this proof, a seller has no assurance you can obtain a mortgage for their home, which runs the risk that your financing—and their sale—will fall through.
As an alternative, many buyers submit a Pre-Approval Letter. This can be helpful but given that Pre-Approvals don’t require the same level of verification as a Verified Approval, you can likely give yourself a stronger leg up on the competition with a Verified Approval.
Get an initial underwriting approval with a Mr. Cooper Verified Approval, and receive an approval letter as early as the same day or next day! It’s fast, free, and shows sellers that you’ve got one of the nation’s largest servicers behind your offer.
2. Adding unnecessary contingencies and concessions
Did you ask the seller to help pay for closing costs, leave an appliance behind, or make a repair? Adding contingencies and sellers’ concessions to a contract can risk a rejected home offer, especially in a seller’s market when your competition may add none. Take care before requesting things like minor repairs and financial incentives that don’t benefit the seller in a tough market.
That said, you should discuss what contingencies to keep with your real estate agent to protect yourself. Two of these include the financing contingency (aka mortgage contingency) and home inspection contingency. A financing contingency allows you to back out of your contract if your mortgage doesn’t fund. An inspection contingency helps you avoid major unexpected repairs. Many homebuyers drop it in competitive markets and regret it. Our blog “Top 5 Homebuying Mistakes In A Competitive Market” outlines how to keep it and still make an appealing offer.
3. Not meeting the seller’s needs
In some instances, sellers may have specific preferences, as well. When preparing an offer, be sure to ask your agent to connect with the listing agent on these needs. They can involve:
- Accommodations such as a longer (or shorter) escrow period.
- Increased earnest money deposit.
- No requests for repairs.
- The right for the seller to rent the home from you after closing until he or she finds a new one.
A seller may also have a fixed timeframe to sell their house. A great way to provide added confidence is to have a guaranteed closing date through your lender.
The Mr. Cooper® Close On Time Guarantee ensures your mortgage will close on time or your first month’s mortgage payment (principal and interest) is on us.* It’s available on eligible contracts with a closing date as soon as 21 or 30 days after you apply and submit initial loan documents.**
** Guaranteed Closing Date must be at least 21 days for conventional loans and 30 days for VA and FHA loans after the date that you submit a complete mortgage application, purchase agreement, and all requested initial supporting documentation (including income/asset verification documents) to Mr. Cooper. If the loan does not close on or before that date, (subject to important terms and conditions), you will receive a check equal to your first month’s principal and interest payment following loan closing. See the full Mr. Cooper® Close On Time Guarantee terms and conditions below.
4. Personal reasons
Finally, your offer may have nothing to do with why it was rejected. A seller’s personal reasons often play a large role in which offer they accept. They could feel that you are not the right fit for the home that holds sentimental value for them. In the past, many real estate agents recommended writing a personal letter to sellers to make your case with them. But according to the National Association of REALTORS® that practice is now discouraged because it can lead to illegal discrimination based on things such as your familial status if they’re disclosed in your letter. Instead, experts recommend making a strong offer to stand out.
Understanding common reasons for a rejected home offer and how to avoid them is the first step in writing an offer that will be accepted. For more tips on making the homebuying process work for you, visit our homebuying guide.
Tradenames and trademarks used in this blog post are the property of their respective owners. Nationstar Mortgage LLC d/b/a Mr. Cooper is not affiliated, associated, or sponsored by any of these owners. Use of these names and trademarks is not intended to and does not imply endorsement, but is for identification purposes only. Information provided does not necessarily represent the views of Mr. Cooper. Information is subject to change without notice.
* Mr. Cooper® Close On Time Guarantee Terms and Conditions
The Mr. Cooper® Close On Time Guarantee offers assurance to customers purchasing a home with a Mr. Cooper home loan that the loan will close on or before the contract closing date, or the customer will receive a check equal to their first month’s principal and interest payment (“Guarantee Payment”). The customer is still responsible for making all scheduled loan payments according to the loan documents. For NY customers, this may be subject to attorney availability and requires Mr. Cooper approval.
Eligibility: To be eligible for the Mr. Cooper® Close On Time Guarantee,
(1) the customer must:
(a) submit a complete application for a purchase money home loan product directly to Mr. Cooper;
(b) provide a fully-executed purchase contract which must include all pages, addendums, and required signatures;
(c) provide all requested supporting documentation (including income/asset verification documents) needed to make a loan decision and signed initial loan disclosures within 24 hours of submitting the home loan application or within 24 hours of request. All required documents must be submitted electronically using Mr. Cooper’s online portal, Loan Tracker; and
(d) remain responsive with any further requests from Mr. Cooper and third party providers (such as appraisers and inspectors) in connection with the processing and underwriting of the home loan by providing any required documentation, access to property, or other response within 24 hours of request; and
(2) The loan application must be for a first lien, owner-occupied, conventional, VA, or FHA mortgage loan product. This offer does not apply to non-conventional, or non-QM loan products.
(3) All required appraisals and an acceptable home inspection must be received 10 days before the Guaranteed Closing Date. Title work must be completed 5 days before the Guaranteed Closing Date. Sufficient funds to close must be verified 5 business days before the Guaranteed Closing Date. All required approvals from third parties (e.g. HOA, Condo certifications, etc.) must be received 5 days prior to the Guaranteed Closing Date. If home purchase is dependent on sale of home, proceeds from home sale must be received same day or before the Guaranteed Closing Date. For home loans to be secured by new construction, Mr. Cooper must receive a completed Final Inspection and/or certificate of occupancy at least 72 hours prior to the Guaranteed Closing Date.
Guaranteed Closing Date: The purchase contract closing date (“Guaranteed Closing Date”) must be at least 21 days for conventional loans and 30 days for VA and FHA loans after the date that the customer submits the complete mortgage application, purchase agreement, and all requested initial supporting documentation (including income/asset verification documents) to Mr. Cooper’s Loan Tracker portal. If the loan does not close on or before the Guaranteed Closing Date (subject to these terms and conditions), the customer will receive the Guarantee Payment in the form of a check following the home loan closing. The customer is responsible for any tax liability related to participating in the program and should consult a tax advisor if there are any questions about their personal tax situation.
Important Restrictions: The Mr. Cooper® Close On Time Guarantee will not apply if: (1) an existing loan application has been submitted by borrower involving same subject property address as of May 19, 2019 (2) changes are made to the original closing date as documented in the purchase agreement; (3) changes are requested to the loan amount, product, or terms requested within 10 days of the Guaranteed Closing Date; (4) there are changes to borrower’s income, employment, or debt from time of application to closing; (5) closing date extensions are due to a delay in completion of new construction, improvements, or property repairs; (6) either borrower or seller fails to meet purchase contract terms and requirements including seller-related delays, (7) home loan transaction involves a Co-op, CEMAs, or requires two or more appraisals, and/or (8) delay in closing is due to force majeure events including weather, or natural disaster.
Mr. Cooper reserves the right to amend, terminate, or withdraw the Mr. Cooper® Close On Time Guarantee at any time without prior notice.