top of page

Back on the Market: Most Common Reasons

As a seller:

Did you need to put your house back on the market?

Going through the home sale process only to find out you need to go back on the market is frustating.

Why do pending home sales fall through?

Great question, right?

Whether you’re buying or selling a home, uncertainty hangs over every contract:

Will the other party uphold their obligations?

Will they change their mind?

There are many reasons real estate deals fall through, but with a little knowledge and insight, you can increase the chances that your contract leads to a successful closing.

When a buyer and a seller agree on a contract, everyone hopes things will go according to plan.

Unfortunately, sometimes life throws a curveball.

Some issues can lead a home that is under contract to come back on the market.

Some issues are more difficult to deal with than others.

Many variables are involved in any real estate deal, such as whether surprises will turn up during the home inspection or if a seller /buyer will have second thoughts.

Re-listing a home on the Multiple Listing Service has more negative connotations than one would like, and many questions from buyers and their agents.

Sometimes the reasons houses come back on the market are not under the seller’s control. Other times that is not the case. Knowing what could go wrong will help you better steer clear of pitfalls.

Right or wrong, more often than not, houses that come back on the market are considered damaged goods.

Whether you are a buyer or a seller, it can be helpful to know why the sale may fall through so you can avoid these situations if possible.

Remember, just because a home comes back on the market does not mean it is undesirable. If you can verify the issues that caused the original agreement to fail and that those issues have been resolved, such homes can still make a good buy.

When the buyers and sellers agree on a contract, the listing agent will change the status on the MLS from ACTIVE TO PENDING ( or ACTIVE WITH CONTRACT)

Let’s examine the most common reasons homes are back on market.

1. There is a Problem With The Home Inspection.

The home inspection report is the top reason why a house comes back on the market.

A home inspection will look at all a home’s major components to identify any problem areas.

Most home inspectors are well-trained and experienced—so if they find a serious issue, chances are it is worth worrying about.

Below you’ll see why home inspections cause homes to return to the market.

Some of the main problems that home inspectors find include the following:

Mold Found in The Home

The verdict is still out on whether mold causes actual health problems in people, but that does not mean buyers will be ok with significant mold in a home.

Mold also indicates moisture spreading which is undesirable for many reasons.

Mold remediation is an option, but buyers may buy a different home than one with a mold problem.

Here is what you need to know about mold when buying or selling a house. Just like radon, mold can be remediated from your home fairly quickly. There are professional companies that provide mold remediation services.

The Septic System or Plumbing issues.

Every home needs a working sewer or septic system. Unfortunately, a poorly maintained septic system can fail. An inspection can discover such a failure and cause a buyer to back out of a transaction.

The cost of a septic system or drainage can be tens of thousands of dollars.

OLD Electrical Panels

Not approved by insurance companies.

Cloth Wiring:

I had more than one buyer who got more negotiating power and requested seller contribution towards re wiring the house…

Structural Problems, Active Roof Leakings, extensive termite damage,

One way to prevent houses from returning to the market due to home inspection issues could be

getting a pre listing inspection.

Be Pro Active

Knowing the condition of your home before listing it for sale will better prepare you for negotiations and it can save a lot of heartburn as well.

You can never be too prepared for the buyer’s home inspection.

2. The Buyer Does Not Get Their Mortgage Commitment.

Mortgages are not fully guaranteed until the buyer has signed a final agreement with a lender. While buyers can get pre-approved and pre-qualified for mortgages, things can change between these pre-verifications and when the money needs to exchange hands.

A buyer that makes significant financial changes, like changing jobs, taking out another loan, buying furniture before closing, closing credit cards, etc., may find that the mortgage they thought was a sure thing is no longer available.

Buyers often do things because they don’t know that they can cause them to lose their mortgage approval before the closing.

3. The Appraisal Comes In Low

Another issue that can cause the mortgage not to be approved is if the home is appraised at a lower value than the agreed-upon sales price.

Lenders will not hand out more money than they think is necessary, and in the end, they always rely on the appraisal price to determine what they will loan out to the buyer.

There needs to be an amicable solution between buyers and sellers when there is an appraisal gap. That doesn’t always happen.

4. The buyer Defaults and Walks Away, Forfeiting The Deposit.

Buyer’s remorse is genuine – it does happen! It may seem strange that someone would throw away money by defaulting and losing their earnest money deposit, but sometimes it does happen.

Sometimes buyers determine that they don’t want to buy the home at the last minute for various reasons. They Changed their minds.

Whatever the cause, it leaves the seller in an awful position.

Sure, sellers get the earnest deposit money when buyers default. But they also have to go through all the process of listing and finding another buyer to sell their home.

Escrow deposits are intended to discourage this kind of behavior on the part of buyers, but sometimes the discouragement is not enough.

The buyer could determine they are better off forfeiting the deposit than going forward with the transaction.

5. A Failed Home Sale Contingency.

Most Realtors will tell you to avoid home sale contingencies because they can cause a sale to fall through.

There are many real estate contingencies that buyers and sellers may attempt to attach to the sale, although some are more popular than others.

For instance, some buyers trying to sell their current home will ask for a home sale contingency that says they will only buy if they sell their existing home first.

If their current home does not sell for any reason—and there are so many reasons a house might not sell—then all the work the seller did with the buyer is wasted.

The deal falls through, and the seller is left searching for another buyer. Home sale contingencies are risky.

You are essentially putting faith in your home selling via another party doing what’s best to sell their own home. You lose control of the selling process.

6. Title Defects Are Discovered on The Property.

Title defects can be a real pain when it comes to home sales. There are so many ways that these can occur, so it is essential to conduct a title search as soon as possible.

Title defects include illegal deeds, public records errors, unknown easements, forgeries, and more.

The main reason to purchase title insurance is to help you overcome these defects, should they arise.

7. The Home Turns Into a “Short Sale” and Needs to be Sold Differently.

Sometimes homeowners discover that they need to sell their homes for less than they owe on their mortgage.

This kind of sale is known as a “short sale” and may require a different sales process than the one typically used for homes.

For example, in a short sale, the lender who holds the loan will require the seller to get what’s referred to as short sale approval. In other words, the lender needs to approve that they will receive less money than they are owed.

The original sales agreement may not work for such a situation, which necessitates that the contract is dissolved and the owner find other avenues for selling the home.

The short sale approval process must occur if the owner can’t bring the “shortfall” to closing.

8. Lack of Disclosure

Disclosing pertinent facts are required when selling a home.

Understanding seller’s disclosure is essential in real estate.

What are the relevant facts?

Something that could influence a buyer’s decision to purchase a house.

Here are some examples of things that might be required to disclose when selling:

There are structural issues with the property.

Known toxic materials in the house.

Off site hazards.

Insurance claims

Unauthorized remodellations ( without city permits).

Money the seller will lose:

If a deal with a buyer falls through, the seller stands to miss out on other offers. Once a contract is in place, the seller must close the deal with the buyer — even if they received a more valuable offer after the fact. If the initial contract falls through, that better offer may have already moved on. If the seller is trying to buy another home at the same time, the failure to close on the sale of their current property could also cause them to lose the house they want to buy.

Money the buyer will lose:

If the buyer backs out under a valid contingency, they’re entitled to get their earnest money deposit back. If they breach the contract without a valid reason, the seller can keep the earnest money. Earnest money is the deposit and the buyer pays this deposit when they sign the contract. The funds are placed in an escrow account and applied toward the buyer’s closing costs when the transaction concludes.

How to prevent a home sale from falling through:

Ideally, both principals in a real estate negotiation will be motivated to close the transaction. When principals and agents deal fairly and honestly with each other from the very beginning, things are less likely to fall apart. Both buyers and sellers need to understand their obligations and follow through with them to make sure everything goes smoothly. For starters, that means that everyone involved needs to sign and submit the required paperwork on time.

Buyers can proactively protect their deal from falling through by working closely with their lender to ensure their financials are in order and knowing ahead what they can comfortably afford.

For sellers, there are a few things they can do to ensure that a sale goes through. First, disclose any problems with the home upfront and don’t attempt to conceal anything. Otherwise, a home inspection will find it and give the buyer cause to reconsider. Sellers should also satisfy any liens and establish a clear chain of title before putting their home up for sale. Finally, sellers should carefully consider a potential buyer’s ability to close a deal by finding out if they are pre-approved for a loan or have cash in hand.

The bottom line

Buying or selling a home can be an uncertain process, but most real estate deals go as planned. Contract contingencies can allow buyers to back out under certain conditions. However, contingencies are negotiable when the parties are drafting the contracts.

Frequently asked questions

Why do pending home sales fall through?

They often fall through if a buyer exercises a contract contingency, such as a home inspection or home sale contingency.

Why would a house be pending for so long?

In a contract, the buyer and seller can mutually agree to extend the closing date, usually, if the buyer needs more time for loan approval or pending the sale of their current home.

Can a realtor show a house that is pending?

Yes. A real estate agent can still show a pending home, as long the seller approves. It’s often beneficial for sellers to continue showing the home in case their current contract falls apart.

Who pays for a home inspection if the deal falls through?

The buyer usually pays for a home inspection

Hopefully, the above information on why houses come back on the market has been worthwhile. Understanding these issues can sometimes help prevent problems.

If you ever have a question, don’t hesitate to call, I will be happy to help

1 Home Owner: Track your equity

Save money: Build wealth

Click below for your instant free value report


Featured Posts
Recent Posts
Search by tags
Follow Us
  • YouTube Social  Icon
  • Instagram Social Icon
  • Facebook Basic Square
bottom of page