In this low inventory market we are experiencing, I'm seeing more and more homes go off the market in less than a week, and then 10-30 days later, come up online as "BACK ON THE MARKET!" It's happened to my listings a couple of times, and it seems to be happening a lot around the office with other listings. Why is this happening? What does it mean when a home goes "back on the market"?
First, it's important to explain that the current Pennsylvania Sales Contract is designed to protect the buyer. Which is great if you are a buyer! There are a few ways you can get out of the contract, should you find out during inspections that something was really wrong with the home, and different than what the seller disclosed. Maybe the seller does not want to fix it or give you a sellers assist to repair it yourself, or lower the price. However, sometimes the seller does agree to fix it, and the buyer decides not to buy the property and use the contingency to walk away from the contract. Or they don't even get through inspections, and terminate the contract for no apparent reason.
Talking to fellow agents in my office, who work with both sellers and buyers, we came up with a couple of reasons this is happening more often (other than there was something seriously wrong with home, which is rare):
1) Multiple Offer Situations: The current climate is such that often times a nice property will receive multiple offers, if priced well, during the first week on the market. This creates a buyers' "frenzy" and the bidders put in their highest possible amount to win the contract. Sometimes these bids will be right at the top, if not a little over, of the Buyer's desired budget for a home. 10 days later, and the Buyer is rethinking that offer amount, and if they can really afford it.
2) Buyer's Remorse: Plain and simple, the buyer got excited at the competitive environment, wanted to "win" the bid, and now that they have the home, they realize they really didn't want THIS particular house. It happens.
3) Seller's Lack of Disclosure: The seller leaves something out of the seller's disclosure that they could have disclosed or disclosed MORE to the buyers. Being that the sellers disclosure form is somewhat complicated to fill out alone, without an agent's guidance to explain all the questions, sometimes a seller writes "UNKNOWN" or doesn't know where to put a repair they did on the form. It's important to have conversations before, during and after with your agent about how to fill out this form correctly. It's not something to be done last minute, or the day before the Open House. It takes a lot of thought, and sometimes looking up receipts as to when you actually bought that water heater is worth the effort, as that information will come out during inspections.
4) Financing: Down the line (20-30 days), as the deal gets closing to closing, there is still a mortgage contingency on the contract. While not common, something could come up on the Buyer's financials that does not allow the mortgage commitment to go through.
5) Squirrel! This one, however unethical, does happen. The Buyer sees another home during the 10-day inspection period, and wants that home instead. Hopefully this doesn't happen often but I hear that it does happen.
So what can you do as a Seller to avoid this? Look over multiple contracts carefully and the Buyers Financials. Ask your agent to have conversations with each of the other agents to ask about the Buyers, and why they want this home. Ask your agent to call the mortgage company to verify pre-approval, and look over the financials to see that they can comfortably afford the offer price they put in. Sometimes it's not always the highest amount offer, but the offer with the most solid buyer's financials that is the best offer for a seller to take.
Sellers should also take care to make as many repairs as they can to the home, and/or disclose fully those repairs taken and still needed. Doing your own inspections before you go on sale, and giving that report to buyers is a way to avoid coming out of contract due to surprises uncovered during inspections. It's a little scary to find out all the stuff about your home before it goes on the market, but in the end, it might save you some headaches.
As a Buyer, what can you do to avoid terminating a contract? Read over the sellers disclosure carefully. Ask your agent to ask questions about the home that are ambiguous on the disclosure, and expect a 65-page inspection report to come back...on every house. It's nothing to be scared of, unless there are major defects, and even then, it is a road map for future repairs and maintenance you will be expected to do on your new (but old) home.
Buyers should put an offer in at a price they can afford. If it's just out of your price range, don't over extend yourself, just to win the bid. There will be another home that comes on the market that is in your price range...believe me! It's not worth the time, money, expense of inspections, and tying up your deposit money for a month to realize that you really can't afford that home.
Finally, Buyers don't be nervous about buying a home that has come "BACK ON THE MARKET!" Odds are, in this current market, that there is absolutely nothing wrong with that home. Talk to you agent to have them call the listing agent to find out the "story" and also if they have an inspection you can look at. This is not to replace your own inspection, but to go into the deal with your eyes wide open to the age of appliances and any defects you may have to put money toward in the future. Price accordingly. In the end, you could get a great home, and the perfect price for your family, now that more information is readily available.