Even in the slowest real estate markets, your client’s offer can be rejected by a seller for any number of reasons. However, in a hot real estate market, the chances of an offer being overlooked are much higher. Multiple buyers are more likely to bid on a property, and unless your client’s offer ticks all the right boxes, it can easily be sent to the rejection pile.
In the most competitive markets, buyers may experience that rejection over and over again, and each disappointment increases their chances of throwing in the towel.
Save your clients that frustration—and salvage the time and effort you’ve invested in each client—by understanding the six most common reasons why a contract is rejected in a hot real estate market:
- The client chooses the wrong lender. If the listing agent has had a bad experience working with a client’s lender, he or she may discourage the buyer from accepting that offer.
- You went too low on the price. In buyer’s markets, you have the leeway to haggle. However, in competitive markets, you most likely need to match the listing price. In some cases, you may have to add an escalation clause to beat out other offers. In fact, if the seller is offering a fair market price and you offer a lower price, you could insult the seller who may not even offer you the chance to beat out other offers.
- You make a bad impression on the listing agent or seller. Real estate agents don’t want to take the blame for hurting a sale, but if you are overly aggressive, pushy, unpleasant or unprofessional, sellers and their agents may decide not to work with you or your client.
- The client doesn’t have important finances in order. For example, your client hasn’t earned a pre-approval on a loan, submits a weak lender letter to the seller, offers an earnest money deposit that is less than the seller requested, or presents in the contract financing terms the seller didn’t agree to. Encourage your clients to have all their financial ducks in a row before you make an offer.
- You submit sloppy contracts. A poorly prepared or presented contract can kill a deal fast. For sellers, reworking the contract or clarifying details just isn’t worth their time when other buyers present well-prepared and thorough contracts.
- The client can’t meet the seller’s deadlines. When buyers’ offers are contingent on selling their own properties or they can’t close by sellers’ desired deadlines, it forces sellers to choose buyers who can meet their needs, even if they must take less money to close quickly.
As you prepare your clients to make offers on properties in competitive markets, keep those six mistakes in mind. You can also check out our new course, Navigating a Hot Sellers’ Market, designed to help real estate agents close deals quicker and ethically in a hot real estate market.
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