Offers not being considered (appraisal, 1%, agent, mortgage)

[marigolds6]

We're first time home buyers. While our income and credit are fine, we only have enough savings for 90% LTV against a new home (we are doing a conventional loan and are income ineligible for the home buyer credit monetization programs - but will likely apply the credit as a prepayment once we get it).
Twice now we have gone through several weeks of searching, found a house we liked, and made an offer. 1st time was within 5% of asking, 2nd time was asking price (but with seller paying up to $2k of closing costs, about 1% of the asking price). Both times, the seller not only accepted another offer, but according to the selling agents accepted without even seeing our offers. The first time, the seller's agent said the buyer and seller were "a long ways apart" and that our offer looked really good. We put together our contract that night, faxed it over, and about 18 hours later the seller's agent informed our agent that the sellers had accepted the original offer before they read our offer.
The second time, we saw the house in the morning and even talked to the seller's agent. We went straight back to the office, put together the asking price - closing costs offer that morning. Our agent called theirs up to tell them the offer was on the way, which, again, the selling agent said our offer looked very good and would probably be accepted. And 30 minutes later the agent called back to say that the sellers just accepted another offer, again without even looking at our offer.
Our agent is perplexed, as both times he was assured that there were no serious offers. We're feeling depressed; and we have less than 30 days to decide on whether to renew our lease.

What can we do about this? Is this purely bad luck, or are we being rejected outright because of our low LTV? We are pre-approved already, although we have less than 6 weeks left on our pre-approval now. We have been putting up an appropriate amount of earnest money. We've been proposing short closing timeframes (both houses were vacant) and our only contigencies have been title, appraisal, and inspection contigencies. Should we go longer on the closing timeframes? Should we be considering "as-is"? Or should we just consider taking a break and give up this year? I don't think we could take spending another 4-6 weeks house hunting only to have this happen again where our offer just gets shot down without even a first look; especialy with our lease deadline looming.

[arkcitynative]

You didn't say how long the houses had been on the market. If only a few days and if they were at a really good price then the sellers might have had cash offers. I don't even bother messing with the super low priced houses in our area because they tend to get several cash offers immediately.

So if that is the case, then I would focus on houses that are decent deals but might not be super low bargain prices. We found a house in good shape and in our price range. I don't think it was the deal of the century but I think it was priced well and we are happy.

If this wasn't the case then I don't have much in the way of advise. Possibly an agent with some experience in these matters might have some insight.

[eric#1]

What do you mean when you say the sellers never "looked at your offer". Do you mean it was never even presented to them? No one told them it existed? They didn't even know the price of the offer?
Were the terms presented over the phone? Other offers may have been cash. Hard to say though.
My suggestion - Step back, breath deep, and forget about the homes you didn't get. I think good luck and bad luck comes and goes. Be persistent, you will get your turn - Don't let the process get you down.

[marigolds6]

In both cases, the houses were on the market less than 2 weeks, and were just under $200k, which is above average for the neighborhood and size. Basically the houses were priced high but in good shape.
In both cases, terms were presented to the agents over the phone, agents informed the sellers of the price of the offers, we faxed the contract, and next thing we heard was that the sellers accepted another offer before the agent even received our faxed contract.

We are pretty much scrapping the bare minimum on acceptable houses for us at this price range; maybe we just have to bow out, save up another couple of years, and come back when we can afford more.

[newmom2007]

I know you are not going to want to hear this, but as a seller in this market I'm no longer considering someone who cannot put 20% down. My first potential buyer was only putting 10% down, and ended up having mortgage issues (because of appraisal issues - but that's for another thread). So, the deal fell apart about 2 weeks before we were supposed to close. That was about a month ago, and now I'm in atty review with a buyer who's putting 20% down. We may still have mortgage/appraisal issues, but at least they are more financially secure (in my opinion) so if those issues happen, we may be able to work through them. It's just not that easy to obtain financing anymore, and at 10% I am extremely nervous. Once bitten, twice shy.

[NORMGLO]

Originally Posted by newmom2007

I know you are not going to want to hear this, but as a seller in this market I'm no longer considering someone who cannot put 20% down. My first potential buyer was only putting 10% down, and ended up having mortgage issues (because of appraisal issues - but that's for another thread). So, the deal fell apart about 2 weeks before we were supposed to close. That was about a month ago, and now I'm in atty review with a buyer who's putting 20% down. We may still have mortgage/appraisal issues, but at least they are more financially secure (in my opinion) so if those issues happen, we may be able to work through them. It's just not that easy to obtain financing anymore, and at 10% I am extremely nervous. Once bitten, twice shy.

Unfortunately I think this is what is happening. When sellers have choices they tend to shy away from low downpayment offers out of fear that the deal may not close.

[redpanda]

Not sure where your market is, but around here a 20% downpayment is extremely rare. A 10% one would be quite advantageous. 5% is more the norm. But like I said, it depends on where you are.

[JohnG72]

Some agents won't show offers if the buyers are represented(they want to represent both parties and get the whole 6%).

[marigolds6]

So being pre-approved doesn't offset the 10% down payment issue? (Not pre-qualified... we already submitted our paystubs, tax returns, etc and got approved for a specific amount - we just have to fax in the contract when it's signed.)

[middle-aged mom]

Originally Posted by JohnG72

Some agents won't show offers if the buyers are represented(they want to represent both parties and get the whole 6%).

Listing agents are required to present all offers, unless the seller instruct otherwise. Your agent can see the ID of the buyer's agent when these sales are reported as closed within the MLS.

Loosing out in a multiple bid to a party represented by the listing agent in a multiple bid scenario is a serious red flag.

As it relates to this situation, are these bank -owned properties?