Have you ever wondered why a property didn’t close and shows on MLS as back on market? There can be numerous reasons but these are a few of the more common ones. As a seller, you should avoid a back on market situation because it gives the stigma of something wrong.
For a buyer, this may be an advantage due to a price adjustment, a more flexible seller or availability of information from previous inspection reports.
Common Reasons For A Back On Market Home Listing
Inspections & Repairs
Probably the number one reason a sale does not close is due to a bad inspection. This is why a pre-listing inspection is worth considering. Real estate inspections are general in nature which means they are a quick look at your homes condition at a particular moment in time.
Once the inspector notes, “recommend an air conditioning professional investigate further” it can cause a buyer to get nervous. It is much better to resolve problems beforehand, negotiate from strength and close your sale the first time.
There may be more repairs required than a buyer wants to deal with or the seller wants to fix. What is a minor annoyance to a seller may be deal killer to the buyer. Sometimes a solution just can’t be agreed upon. At this point, the buyer will exercise their termination option and the process starts over again with the next buyer.
Be aware that the next buyer is entitled to an updated disclosure of your homes condition and previous professional inspection reports.
Financing Falls Through
Financing in today’s market is challenging. Most contracts are contingent on the buyer obtaining affordable financing within a negotiated number of days. Just because you have a signed offer does not mean you can celebrate yet. Financing can even be approved for your buyer but last-minute purchases, underwriting changes, property or market conditions can kill the loan.
Never assume your home is sold until it is closed and funded. Buyers should be aware that right before the closing, the lender will pull your credit again. Save the new appliance purchases until after you own the home.
Low Appraisal
Low appraisals are always a good way to end up back on market. Sellers naturally have inflated views of what their home is worth and may not realize how the market has changed. Buyers and sellers may agree on a price but the lender is only going to loan based on the appraised value. While appraisals can be disputed, in most cases the choices are for the seller to lower the price or for the buyer to bring more cash to make up the difference.
Remember, appraisals are based on similar sales of comparable properties sold within the last six months. In a recovering or rising market, the appraised value could be based on sales six months old.
Survey Surprises
Occasionally a survey may show problems that result in a back on market condition. This can be anything from an encroachment to an easement making the property unusable for the buyers needs. Perhaps they can’t put a pool in the backyard or they are in a flood plain. Of course the worse case would be the property description and the survey don’t match.
Title Issues
Title issues are becoming more common in the age of short sales and foreclosures. There is considerable paperwork, various people required and proper procedures that must be preformed correctly for an insurable title.
This could involve owners, spouses and X spouses, next of kin, primary and secondary lenders, tax and mechanics liens, mineral estates and a host or other claims or conditions that could prevent an insurable title. Normally the title company will resolve these conflicts but they may not be able to do so within a reasonable time frame, especially on foreclosures.
HOA Covenants & Deed Restrictions
Most of the time a buyer will purchase a property without having full knowledge of the HOA requirements or deed restrictions. During the option period or other periods of due diligence they may discover things they can’t agree with. A title search should bring these things to light.
The buyer will have an opportunity to consider if the property still meets his needs. Some examples of common restrictions that could kill a transaction may be acreage can’t be sub-divided, no manufactured housing or restrictions on truck size, parking or recreational vehicle storage.
Insurance Claims
There could be a claim that occurs while the property is under contract. A hail storm is a good example of something that could easily happen in our area. Repairs may be too extensive or they may not be able to be made in a time frame that will allow the closing to take place. Lenders may require repairs that insurance won’t cover.
All of these things and more can cause a sale to fall through resulting in it going back on market. They may or may not be within your control. A good Realtor will have the knowledge that these things could occur and prepare you appropriately. Call me at 469-233-1234 if I can help you avoid going back on market or your second chance to buy one that it is for sale again!
