Reasons Sellers Might Reject Purchase Contracts in Sacramento

Sellers reject purchase contracts for many reasons during multiple offers.

After receiving a dozen offers for a home in Sacramento, a seller is poised to reject purchase contracts, there’s just no way around it. Sellers might want to sell the home to every single buyer, but that’s impossible. They can pick only one. Of course, it doesn’t mean they can’t send multiple counter offers to every buyer yet, again, that’s not always reasonable. Most sellers tend to pick 2 or 3 offers to counter, which means the bulk of the offers, while reviewed and considered, are unacceptable.

As a top Sacramento listing agent, I see many situations in which sellers reject purchase contracts. I provide guidance, but I do not choose the winning offer, even when the seller begs me to just pick one, I don’t do it. And, yes, sellers have asked me to choose for them. I say the obvious: it’s not my house. I have a 6% interest in the sale but they have 94%, so their opinion is a whole helluva lot more important than mine.

I do realize that sometimes buyers in Sacramento are reluctant to submit an offer when they figure there might be multiple offers. But the way I’ve watched multiple offers work lately, an agent could receive 10 or more offers but only 1 or 2 are competitive. So the odds are if you submit a competitive offer, your offer won’t be among those that cause the seller to reject purchase contracts.

So, why do sellers reject purchase contracts? Let’s look at a few generic situations that could cause such rejection in a multiple-offer situation. I never provide specific reasons for rejection because it’s not any of my business and it is bad risk management.

Offers at list price or slightly above list price by a few thousand. It doesn’t matter if this type of offer is cash or 100% financing. If you truly love the home and see that many other buyers do, judging by the number of cards on the kitchen counter, the number of people crowding the open house, or simply the appeal and price, an offer at list price or slightly above is rarely enough to generate excitement for the seller. One certainly would not offer list price and an hour later send a revised offer to reduce it, under any circumstances, yet people drink the Kool-Aid anyway.

VA offers in which the buyer does not agree to pay for a pest completion nor compensate for certain fees the buyer cannot pay. For example, a VA buyer cannot pay for escrow, which is customarily split 50 / 50. But a VA buyer could split the owner’s title insurance instead to make up for it.

FHA offers with less than 20% down. Particularly FHA offers with 15% down. While a buyer is free to put down any amount, it makes a seller wonder why a buyer would put down 15% when 20% down would eliminate mutual mortgage insurance premiums. One reason is perhaps the maximum loan a buyer can obtain is with 15% down, and that’s all they have. So they can’t pay more than list price nor bridge a gap in an appraisal. Even 3.5% down buyers might have more money available than a buyer with 15% maximum.

CalHFA loans or any type of first-time home buyer programs that provide the funds for the down payment and closing costs, on top of adding an additional layer for a second approval. Sellers wonder who buys a home without any money? How tight are the ratios? Could any little thing cause the transaction to blow up based on thin margins? This is not a judgment on CalHFA loans, btw, which are perfectly acceptable loans for first-time home buyers who need them.

If you take any combination of these reasons sellers reject purchase contracts, it can compound the rejection and cause an offer to fall to the bottom of the pile.