You have just gone on the rollercoaster of having your house offer rejected by the seller, but then accepted. What does this mean for your house purchase? It can be good or bad – depending on the situation.
While the outcome is good – you have had your offer accepted and ready to move on the Road to Exchange – having your property offer rejected but then accepted in a u-turn by the seller can raise red flags. Here is what this means in four common situations below.
Table of Contents:
- House offer accepted after a long period of time
- House offer accepted shortly after rejection
- House offer accepted when there were competing offers
1. House offer accepted after a long period of time
This is the most common scenario. In the majority of cases, this is down to two things – either the seller has reduced their expectations of their property value over that time, or there has been no higher or credible offers more than yours during that time.
Getting your offer accepted after a long period post rejection is usually a good thing, as the seller has now consciously made the decision to accept a lower valuation, and therefore unlikely to have cold feet between now and Exchange Day.
However, it could also be a red flag that your house offer, while lower than what the property seller was initially willing to accept, could still be higher compared to what others in the market are willing to pay. The fact that there were no other higher offers, or even a similar offer, during that long time period can be worrying.
Before proceeding with the seller’s change of heart to accept your offer after the rejection, I would do a bit more research into valuations. To make sure that your calculation of the fair market value of the property (and therefore your initial rejected offer) is strong.
2. House offer accepted shortly after rejection
This often happens, although not as commonly as in the first scenario. You might get a surprise call from the estate agent a few hours, a few days, or a week after your offer was rejected. This is why, at First Time Buyer Help, we recommend waiting at least a few days before putting in a second revised offer.
Why does this happen? This is usually down to the sellers not being very experienced in negotiations or unsure of the property price they want to achieve. Having had a number in their mind, and therefore rejecting your first offer on their home, their confidence may shaken by self-doubt in their mind over the following days. Especially when you decline to go back with a higher offer, and/or in the absence of any other offers from other prospective home buyers, they might then panic that they have “lost” their chance to sell their property with a buyer slipping through their fingers.
Remember, if you are feeling lots of rollercoaster emotions as a First Time Buyer, the seller (often a First Time Seller) is probably feeling similar ones!
So a change of mind by the sellers from rejection to acceptance, is usually not a red flag. It can be explained by emotions and property amateurs trying to conduct a business transaction.
However, seasoned negotiation pros and property pros sometimes use this tactic to suss out how desperate a buyer is for the property. They reject the first offer, to see how the buyers respond; whether they hold firm on their conviction on the pricing, or whether they panic and immediately come back with a higher offer, scared of losing their “dream home”. Therefore, it is vitally important, that as a buyer you do not immediately go back with a higher second offer, if your first offer is rejected. Otherwise, the seasoned pro will know they have the upper hand and squeeze you for as much as you can afford to pay, either now or later close to Exchange Day by gazumping.
3. House offer accepted when there were competing offers
This happens less commonly. If there were multiple offers, and you got rejected, most likely it was because there was a higher or better offer from another buyer.
A seller will come back and accept your house offer, after rejecting it, only because the original “high bidder” was not credible. Either the bidder had a change of heart, or after some due diligence, it was found they were not in a position to progress towards Exchange of Contracts.
I would treat this as a stroke of good luck, that even though you were not the highest or best offer, you now have an offer agreed on your dream home.
However, be aware that with some dodgy estate agents or sellers, they will “pretend” that there are other bidders, and pressure you to submit sealed bids or best and final offers, to get unsuspecting First Time Buyers to immediately offer the highest they can afford to pay. There will be no other buyers, as it was all fictional to get you to put in an offer higher than you would have otherwise. And by taking it a step further and rejecting, they were waiting to see if you would increase your offer even further, in desperation to secure your dream home.
If there were genuinely other bids and interest, I would watch out for gazumping while you work towards Exchange of Contracts. Not from the seller gazumping you, but one of the rejected buyers coming back with a higher offer, which will be too good for the seller to refuse.
This could mean you spending money on surveys, conveyancing, valuations, mortgage fees, to get yourself back to square one. Therefore, if you are happy to proceed, I recommend probing the estate agent why the higher offer was rejected and yours was accepted. If it is a legitimate reason – the other buyers found another property, they were not in a position to proceed because of a chain, etc – then that would be some comfort. If the agent is evasive with their answer, it could be a red flag.