I have just spent the past five years perfecting a manuscript that is a love story which takes place in New Orleans. I have sent it to 8-10 agents for a "Sample test" to see what the responses were. I received some very kind praise from many agents, including good atmospheric description, but still received rejection letters. A lightly famous film producer looked at it and thought that it had enormous potential as a film project, but that it needed some more editorial consultation to "harness all of the creative energy". Do you think that these rejections are matters of taste, or is it worth a second look to iron it out?
So there are two separate issues here, the film producer's comments and the agents' comments. The two are not as related as you think. I don't know much about the film industry, but I do know it involves a lot of lying and false praise and then crushing disappointment, or so all my screenwriter friends tell me. If you didn't write a screenplay, I don't know why you're talking to a film producer (are you friends?) but getting it into a screenplay you would want to sell is a whole different genre and industry in writing and something that's beyond my abilities to really judge.
Except in rare cases, movie rights to a published book are sold by the agent to the film company. When a book is bought by a publishing house, they do not buy the film rights unless that's specified in the contract, and it would be weird for a publishing house to ask for film rights and then something the agent would immediately demand to be deleted from the contract. A lot of money is to be made from film rights to a book, provided your book goes to film, but that rarely happens.
EDIT: Look in the comments, where someone in the film industry has written a long and instructive post that is better informed than mine.
As for the agents, if they wrote personal, descriptive comments and didn't send a form letter, that's pretty awesome. It's still a rejection, but you're close. Revise the manuscript based on their comments if you feel their comments are worthwhile and keep querying.
My other question is, how do you know when a manuscript is ready to sell?
It's done to the best of your abilities as a writer and editor.
And would your recommend me spending an extra thousand dollars to have it professionally edited before sending it out?
No, absolutely not, unless you are completely inept at grammar and spelling. In which case, buying a copy of the Chicago Manual of Style is much cheaper.
I feel that the manuscript is completed to the best of my ability, and thought that the kinks could be ironed out by a publishing house editor. I have heard mixed reviews about this-- some people say that they don't spend as much time as they used to on editing manuscripts, and that the industry is more about business. I was wondering if you could comment on this aspect in your blog.
How much editing gets done at the agent stage and/or the editor stage often depends on several factors, but the two biggest ones are (a) the time people have to put into it, (b) how much editing it actually needs. Speaking as someone who helps edit client's manuscripts, I say that you really shouldn't be submitting something you feel needs tremendous editing. You should be doing the editing yourself, then submitting the manuscript that you feel is as good as it can possibly be within your abilities as a writer and then if people along the way have comments, you work with them. Speaking as a writer, I can say that I feel your pain, in that I am always terrified that my work isn't good enough and that the editor didn't catch mistakes they should have caught that I never should have written, and that I'm going to get slammed for it in reviews. I live in constant fear, but publishing is terrifying. However, most things worth doing are a little terrifying, so get a prescription for a tranquilizer/SSRI combo and throw your stuff out there.