Most Common Reasons For Putting Home Back on Market
Did you need to put your house back on the market? If so, you are probably frustrated right now.
Who can blame you?
Going through the home sale process only to find out you need to go back on the market is exasperating!
Why do pending home sales fall through? Great question, right?
When a buyer and seller agree on a home, everyone hopes things will go according to plan. Unfortunately, sometimes life throws a curve ball.
Some issues can lead a home under contract to come back on the market, some more difficult to deal with than others.
Putting a home back on the market is frustrating to a seller and their respective real estate agent.
Nobody wants to go through all the work of completing a real estate transaction only to fall short.
Re-listing a home active again in the Multiple Listing Service has negative connotations and lots of questions from buyers and their agents.
Some of the reasons houses come back on the market are out of the seller’s control. Other times that is not the case.
Right or wrong, sometimes 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 home sales may fall through so you can do your part to 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.
What Does BOM Mean in Real Estate?
BOM stands for back on market. Unfortunately, many homes come back on the market. Buyers and sellers will agree on a contract, and the listing agent will make the sale contingent in the MLS.
Let’s examine the most common reasons homes are back on market.
1. There is a Problem With The Home Inspection.
A lousy home inspection is a 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.
Home inspectors can make mistakes from time to time, but generally, they are well-trained and competent—so if they find a serious issue, chances are it is worth worrying about.
Home inspections are the number one reason houses come back on the market. 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:
High Radon Levels
Radon is present in the soil in many parts of the country. Most of the time, it is in concentrations too low to be a concern.
But sometimes, certain homes are built over higher concentrations of radon, and the house accumulates radon at higher levels than are safe.
High radon levels can typically be remedied with the proper methods. It is not uncommon to have a radon remediation system installed to reduce the radon levels in the air.
Radon can also be found in high concentrations in water as well. Here is how you remove radon from the water in your house.
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 penetration 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.
There is Lead Paint in The Home
The presence of lead paint can cause a buyer to back out of a deal. Sellers are required to disclose any known information they have on the presence of lead paint.
Sellers must follow the federal lead paint law.
The Well Fails The Quality or Quantity Test
A reliable water supply is one of the essential features of a home. All buyers should have wells inspected to ensure they don’t wind up with a lousy well, which is costly to fix or replace.
There can be several reasons the well is lousy, but the result is the same. The buyer would like to purchase a home without water problems.
Here is what homeowners need to know about selling a home with a well. You can expect that an educated buyer will want to test the quantity and quality of the water coming from the well.
The Septic System Fails
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 seller must make repairs or replacements before listing the home again.
In Massachusetts, the septic inspection is referred to as a Title V. Repairing a failed septic system can be costly. The cost of a septic system can be tens of thousands of dollars.
A buyer cannot procure a mortgage without a passing Title V or an escrow holdback to assure the work will be completed.
There are ways to prevent houses from returning to the market due to home inspection issues. You may be wondering how? Easy! Get a home inspection before going on the market!
Knowing the condition of your home before listing it for sale makes a lot of sense. It can save a lot of heartburn as well.
You can never be too prepared for the buyer’s home inspection. Follow these tips before listing for sale.
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 losing a job, changing a position, taking out another loan, etc., may find that the mortgage they thought was a sure thing is no longer available.
Buyers often do stupid things that 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 it does happen.
Sometimes buyers determine that they don’t want to buy the home at the last minute for various reasons.
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 trouble 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 very risky for a seller.
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.
A home sale contingency makes sense only if the property you sell is lackluster. It may make sense if the buyer’s home is far more saleable.
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. Most real estate attorneys will recommend you buy what’s called owner’s title insurance.
7. A Lien is Discovered Against The Property.
A lien guarantees that debt is paid before the property owner can sell the property.
There are quite a few real estate liens, each catering to a different party that might find itself owed money by a property owner.
There are property liens—the liens mortgage companies file on homes to ensure the mortgage is paid—and IRS liens, property tax liens, mechanics liens, and others.
For the lien to be removed and the sale to go forward, the debt must be paid.
Unfortunately, sometimes the owner does not have the financial resources to pay the debt, and the deal falls through.
Understanding how to search for liens is essential in a real estate transaction.
8. 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.
9. Lack of Disclosure by The Seller or Their Real Estate Agent.
Depending on your state, disclosing pertinent facts may be 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:
- Murder or death in a home is considered a stigmatized property.
- There are structural issues with the property.
- Known toxic materials in the house.
- Offsite hazards.
- This is a sexual predator nearby.
Sellers and real estate agents need to understand disclosure laws for their location.
10. Misrepresentation by The Seller or Their Agent.
There are times when home sales fall apart because of misrepresentation on the part of either the seller or their real estate agent.
There are lots of examples of how misrepresentation can take place.
It could be factual, like the home’s condition or where the property line is located.
If a buyer relies on information that isn’t fact, that’s not good.
One of the more common misrepresentations in real estate sales is the number of bedrooms in a home.
The misrepresentation often occurs because of the septic system and bedroom count.
When selling a house, you are only allowed to market the number of bedrooms based on septic capacity.
So if your home has been rated as a “three-bedroom,” you can’t market it as a four-bedroom regardless of whether four bedrooms exist.
11. An Incompetent Real Estate Agent.
Never discount that a real estate agent can get in the way of a transaction happening. When real estate markets become hot, every Tom, Dick, and Harry thinks it’s a great time to jump in and become the next millionaire.
Unfortunately, getting a real estate license is not as difficult as it should be. Since buying and selling a home is a substantial financial transaction, it shouldn’t be this way.
Over my years in the business, I have met some outstanding real estate agents. On the other hand, I have met some folks that have no business being agents.
11. The Buyer Submitted Offers on Multiple Properties
In strong seller’s markets, sometimes buyers will ask their buyer’s agent to submit offers on more than one house. They do this to strengthen their chances of landing a property.
A buyer could potentially end up purchasing two homes. While this is rare, it happens from time to time.
Final Thoughts on Back on Market
Home sales fall apart all the time for various reasons. In some circumstances, the deal could have been kept together with better planning.
Hopefully, the above information on why houses come back on the market has been worthwhile. Understanding these issues can sometimes help prevent problems.
Other Helpful Home Selling Resources
- Easy improvements to increase house value Luke Skar provides helpful guidance on what improvements make your property more valuable.
- Accompanied showings can stop your house sale – Kevin Vitali offers insights into why making the listing agent attend home showings isn’t wise.
- Bad real estate advice you’ll hear – Karen Highland gives her expertise on avoiding bad home selling advice.
Use these resources from other top real estate pros to make the best decisions when selling your home.
About the Author: The above Real Estate information on why homes come back on the market was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 37+ Years.
Are you thinking of selling your home? I am passionate about real estate and love sharing my marketing expertise!
I service Real Estate sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA.
This is an excellent article. Thanks for sharing.