Casualties of bidding wars

Flickr photo by Steve Weaver.

Q: I have been house-hunting for several months now. I have gotten outbid on several properties where the listing agent said there were 15, 20 or 30 other offers. A few weeks later, the places came back on the market! What happened? Was there something wrong with me or my offer? Why did they not just come back to me or the next-highest offer, rather than putting it back on the market? Mine would have been a guaranteed deal!

A: Reading your question was like reading my daily e-mails from my own clients! I've seen this happen a number of times, mostly with my FHA-financed buyers trying to buy bank-owned properties. I don't know enough about your offer to be able to say with certainty whether anything in particular was wrong with it, but I've been doing this long enough to know that chances are either the price wasn't right or you were bested by a seemingly more "closable" offer: a cash offer; one with more money down than yours; or one with a conventional loan (if yours is FHA-financed).

That doesn't necessarily mean, though, that you should have or could have done anything differently. In a multiple-offer situation, the rule is that you make the very best offer you can, considering how much you can and are willing to pay for that particular property, and the best downpayment, loan type and other terms you're able to offer. Don't hold back because, as you've seen, it might be the only opportunity you have to make an offer. If your very best wasn't good enough, then that just wasn't your house.

Now to the question of what happened to the offer that was in place. Probably the single most common reason, in my experience, that homes fall out of contract these days is that something happened and the buyers' loan did not receive final approval: either their credit, income or assets turned out not to be up to snuff on final inspection.

In that same vein, the property might not have appraised for the purchase price, or might have been found to have condition problems the lender refused to accept, which the seller refused to correct -- especially on FHA-financed homes. Buyers do lose their jobs during escrow, on occasion, too -- that tends to make them want to back out of the deal.

Lately, I've seen condos and townhomes fall out of escrow because the homeowners association had too many delinquent dues-payers, was involved in litigation, or otherwise couldn't pass muster with the buyer's lender. Also, in the heat of these multiple-offer situations -- especially on bank-owned and other properties where there is a long time delay between offer and acceptance -- buyers often make offers on other properties and might have simply gotten into contract on another home by the time their offer was accepted. ...CONTINUED

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