No, home sellers are not obligated to accept a full price offer on their home – or even an above-full-price offer.
While price is almost always foremost in everyone’s minds, there are many other terms in the contract that need to be considered before accepting, rejecting or countering an offer.
Here are some reasons (or terms in the contract) why a seller might reject a full-price offer:
• There are other bids on the table with better prices and/or terms.
• There are a lot of showings with prospects of multiple offers.
• The price may be right but the closing date may be too soon or too late.
• The seller needs a leaseback agreement but the buyer wants possession at closing.
• The earnest money may be too little based upon the asking price.
• A mortgage must be obtained and there are concerns with the appraisal.
• The seller may want to wait to see if a cash offer will come in.
• The financing contingency period to obtain a loan commitment is too long.
• A due diligence clause is included which lets the buyer back out for any reason.
• Other contingencies in the contract are included that may affect a smooth closing.
While many sellers prefer a cash offer (cash is considered king and there are no appraisal problems), some buyers will want a mortgage while money is cheap. I have seen some offers where the buyers stated that if there were any related financing problems they would pay cash.
It is also important to review the listing agreement that you entered into with your real estate agent. Some agreements may state that you are obligated to pay a commission if you reject a full price offer. In the agreement that I use there is wording about the owner agreeing to pay a commission upon price and terms acceptable to the owner.
When I represent sellers (which is usually about 90% of the time), I normally recommend countering an offer instead of rejecting an offer with a counter that fully satisfies all of my seller’s needs.
However, if an offer comes in (even at full price) with terms that are unacceptable, rejecting the offer might be the best way to go.
Larry Stoller is a broker and Realtor with Real Estate Five of the Lowcountry. Larry@RealEstateFive.com, RealEstateFive.com, SunCityOpenHouses247.com