A bad move for any new listing is to go from active "for sale" to pending status, and then suddenly appear back on the market. "Back on market" are three words no agent wants to see attached to a listing.
Unfortunately, it's often the case that buyers and their hired agents are too quick to make assumptions about why a given house ends up back on the market. It's typical for them to decide that there must have been something wrong with the property, such as a glaring maintenance issue found during the home inspection.
When a for-sale home does end up back on the market, this new status typically carries a stigma—one that is sometimes underserved, but a stigma all the same.
In fact, there are very few instances when a home going back on the market is considered as a good thing by buyers. Often, this is only the case when there is very little inventory available, meaning no or very few homes for sale. In this case, the home would usually have to be priced a bit below market, show well, and come back on the market as "pending rescission," meaning the previous prospective buyers signed a legal form stating that they had backed out of the sale.
Let's look at a couple of real-life examples of why a home could be sold one minute and then appear back on the market a short while later.
- When a for-sale home ends up back on the market after a pending sale, it usually carries a stigma—one that is sometimes underserved.
- This could happen for a few reasons, like if the buyer submitted multiple offers or was dishonest.
- Or, the buyer may not have been able to obtain financing, or their real estate agent could have made a mistake when helping them submit the offer.
- Some buyers just get cold feet and experience "buyer's remorse." In this case, there's nothing necessarily wrong with the home.
The Buyer Submitted Multiple Offers
Some buyer's agents might encourage buyers who struggle with decisions and can't agree on which home to buy to just write offers on all of the likely candidates at the same time. A terrible result of this bad behavior is a buyer can end up in a contract on more than one home. When this happened to one of my sellers recently, the buyer ultimately decided not to buy either of the homes. Meanwhile, the seller's home was removed from the market as pending.
The Buyer Is Dishonest
There are many ways a buyer can try to hoodwink a seller. Posing as a buyer with financial means and submitting an attractive offer to the seller when he is flat broke is only one of those ways this happens. A records search can turn up evidence of a criminal record, and the seller can promptly cancel the transaction. Unfortunately, the home status changes to back on the market.
The Buyer Cannot Get Financing
Just because a mortgage lender issues a preapproval letter does not mean the buyer is guaranteed to get a loan. In some cases, the loan officer who signs the preapproval letter has neither checked credit nor verified assets. Some buyers do not find out they cannot get a loan until a few days before closing. By this time, the seller's home has probably been off the market for at least 30 days.
The Buyer's Agent Made a Mistake in the Purchase Offer
Legal documents change all the time in real estate. An agent might be familiar with a form and not notice certain details have been altered. For example, it happened that a buyer needed a few months to sell a home but wanted to submit a contingent offer for a home in Sacramento. Her agent wrote the contract giving the buyer seven days to sell her home. But that was a mistake the buyer and her agent did not catch.
When the listing agent asked for the contingency removal, the buyer's agent was dumbfounded to discover she had made such a mistake. It meant the terms in the purchase contract could not be met, and it was back to the negotiation table.
Sometimes buyers believe they made a bad decision and develop cold feet. They slowly begin to realize that with homeownership comes other financial obligations such as maintaining the home, paying for repairs, and upgrades, and they become frightened of what they perceive to be an unnatural burden. Unfortunately, this realization often happens at an inopportune time such as during the middle of escrow.
At the time of writing, Elizabeth Weintraub, BRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.