The Bay Area real estate market is currently undergoing some adjustments. For those closely watching the market, you may have noticed that "back on market" properties are popping up frequently, and some even have significant price reductions. So, can these returned-to-market homes be a good catch? In this article, Kathy will discuss the important considerations when buying a "back on market" property.
The first question that often comes to mind with a "back on market" home is: “Is there something wrong with this property? Why is it back on the market?” To accurately answer this question, your real estate agent needs to communicate with the listing agent to understand the specific reasons for the property's return to the market. Generally, a house that goes into contract and then back on the market might do so for several reasons:
For instance, buyer psychology changes: the buyer may have initially wanted to test the waters and then felt they overpaid when their offer was accepted, leading them to back out; or a family member, such as a parent back home, disapproved of the purchase, prompting an immediate exit from the contract. Other reasons could include the buyer's inability to secure financing, dissatisfaction with loan interest rates, a low property appraisal preventing the buyer from covering the difference, or sudden job loss before the loan is issued, causing the bank to deny funding.
In addition to buyer-related reasons, there could be issues with the property itself. For example, after a home inspection, the buyer and seller might not agree on repair terms or who will cover the costs. Other scenarios include the discovery of significant undisclosed facts during escrow, such as unpermitted additions, title defects, or liens like a mechanic’s lien.
Once you understand the reasons for the property's return to the market, the considerations become clear. If your real estate agent finds out that the return is due to buyer-related reasons and you genuinely like the house, have reviewed all disclosure reports with your agent, and everything meets your expectations, you can confidently make an offer. Especially if you have your down payment, loan pre-approval letter, and proof of funds ready, demonstrating strong financial capability, the seller will be interested in your offer. Sellers, having experienced a previous deal falling through, are likely to favor a sincere and capable buyer. Additionally, because the previous buyer caused a delay, extending the property’s time on the market, this can work to your advantage. You can leverage your sincerity, financial strength, and time, coupled with your agent’s negotiation skills, to possibly secure a great deal.
However, if your real estate agent discovers that the issues are related to the property or its surroundings—such as major repairs needed, severe termite damage, unpermitted additions, noisy pets next door, a yard with a constantly shedding or dead tree, or more severe issues like title defects—you need to evaluate whether you can accept these problems. What are your deal-breakers? What issues are you willing to compromise on for a better price? Based on the current problems, what kind of offer can you make that feels fair yet appealing to the seller? Discuss these considerations thoroughly with your agent. Don’t pass on a property just because it seems problematic. The once hot seller’s market during the pandemic has shifted, giving professional agents the opportunity to negotiate favorable prices. Finally, if you want to learn more about potential title issues mentioned earlier, feel free to click on my previous articleDon’t Overlook the Preliminary Title Report When Buying a Homefor more information.
