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You find a home in Katy, TX that you really like. Then you notice something in the listing history: it was under contract, but now it is active again.
Should you be concerned?
Maybe. But I would not make that decision based solely on the words “Back on Market.”
A home returning to the market does not automatically mean something is wrong with the property. It does mean there are questions worth asking.
Real estate transactions can fail to close for many reasons. The previous buyer could have encountered a financing problem. There could have been inspection negotiations, an appraisal issue, a title matter, a change in the buyer’s circumstances or another contractual reason the transaction ended.
Before assuming the house either has a serious problem or is perfectly fine, here are 10 questions I want my Katy, TX buyers thinking about.
Start with the obvious question.
We can ask the listing agent what information is appropriately available regarding the previous transaction.
Depending on the circumstances, we may learn something useful. There may also be confidential information concerning a previous buyer, seller negotiations or transaction that is not ours to receive.
The important distinction is this:
“Back on Market” tells us that the previous transaction did not close. It does not necessarily tell us why.
This can make a significant difference in how I evaluate the history with a buyer.
Suppose the previous buyer was unable to obtain financing. That is very different from a transaction in which a significant property-condition concern was discovered.
Both properties could appear online as having returned to active status.
That is why I do not want a buyer assuming that a failed contract automatically means a failed house.
If the property was previously under contract, an inspection may have been performed.
That does not necessarily mean the next buyer is entitled to the previous buyer’s inspection report. An inspection report is generally prepared for the client who hired the inspector.
However, we can ask what information is properly available and whether the seller received information concerning the property’s condition.
I would generally still want my buyer to consider obtaining an independent inspection rather than relying solely on another buyer’s due diligence.
If we learn that a previous inspection identified an issue and the seller subsequently made repairs, I want more information.
Questions may include:
A previous problem does not necessarily mean there is still a problem.
But I want the buyer evaluating the available information rather than simply assuming everything has been corrected.
For a Texas resale transaction where a Seller’s Disclosure Notice is required, buyers should review the current disclosure carefully.
If the seller learned new information concerning the property during a previous transaction, we want to determine what current disclosure information is being provided.
Depending on the property, that could involve the roof, foundation, plumbing, electrical systems, HVAC equipment, water penetration, flooding, previous repairs or other conditions.
The seller’s disclosure is important, but it is not a substitute for the buyer’s own inspection and due diligence.
A previous transaction may have encountered an appraisal problem.
That does not automatically establish what the property is worth in a future transaction.
A different transaction can involve another contract price, additional comparable sales, different market conditions, different financing and another appraiser.
For the next buyer, I still want to evaluate the home’s current asking price, recent comparable sales, condition and current competition.
Not every failed transaction is about the physical condition of the house.
Issues involving title, ownership, liens, probate, surveys, easements, encroachments, HOA matters or other property-related documents can sometimes affect a transaction.
Some issues can be resolved. Others may require additional investigation or professional assistance.
As a REALTOR®, I am not an attorney and do not provide legal opinions. If a title or legal issue arises, I want the appropriate title and legal professionals involved.
One failed transaction makes me curious.
Two or three make me even more interested in understanding the history.
I may want to look at:
A pattern does not prove there is a defect. It gives us a reason to investigate the available information more carefully.
Look at what happened after the property returned to the market.
Did the seller reduce the price?
Did the home return at exactly the same asking price?
Has the property accumulated substantially more market exposure?
How does its current price compare with recent comparable sales and competing homes?
Repeated market exposure can potentially affect the negotiating environment, but there is no automatic “Back on Market discount.”
An offer strategy should be based on the specific property, current market information and the buyer’s objectives.
This may be the most important question.
Sometimes buyers become so focused on figuring out why another transaction failed that they lose sight of whether the property actually works for them.
We still need to consider:
A complicated listing history does not automatically make a home a bad purchase.
It does not automatically make it a bargain either.
The property still needs to make sense on its own merits.
Possibly.
Some buyers see that a property has fallen out of contract and immediately skip it.
If the property has returned to the market multiple times, even more buyers may assume something is wrong without investigating further.
If our due diligence does not uncover something that materially changes the buyer’s view of the home, that reduced competition could potentially create a different negotiating environment.
That does not mean every back-on-market property is an opportunity.
It means I do not want my buyers making a decision based solely on the psychological reaction created by the listing history.
Investigate first. Decide second.
This can be particularly important for someone moving to Katy, TX from another city or state.
If you are evaluating homes remotely, a listing history showing several status changes can look alarming without additional context.
Local buyer representation can help investigate available listing information, communicate with the listing agent, review available disclosures, coordinate inspections and compare the property with other Katy-area options.
Technology makes it easier than ever to shop for a home from another city or state, but it does not eliminate the need for careful due diligence.
If a buyer sends me a listing and says, “Jonathan, this house went back on the market. Should we stay away from it?” my first response is probably going to be:
“Let’s find out what we can before we decide.”
That is not the same as assuming everything is fine.
And it is not the same as assuming something must be wrong.
My job as your REALTOR® is not to talk you into a particular house or talk you out of it.
It is to help identify the questions we should be asking, gather and evaluate the information available to us, coordinate with appropriate professionals when necessary and help you make an informed real estate decision.
I put together a more detailed checklist explaining what buyers should investigate when a Katy, TX property returns to the market.
If you have found a Katy-area home with an unusual listing history and want help figuring out what questions to ask, call or text me at 281-549-8099 or visit Jonathan.NestAhead.com.
Jonathan McNabb, REALTOR®
Broker/Owner, Nest Ahead
Katy, TX and Greater Houston
281-549-8099
Jonathan.NestAhead.com
Local Roots Global Reach
This article is provided for general real estate education and is not legal, inspection, engineering, lending, appraisal, tax, title or other professional advice. Every property and transaction is different. Buyers should conduct appropriate due diligence and consult qualified inspectors, lenders, title professionals, attorneys and other professionals when applicable.
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