Why would a buyer make an offer and then back out?
Ask Phyllis: a blog series of frequently asked real estate questions.
Dear Phyllis,
I love reading your real estate advice! And have a new scenario for you. My son lives in the San Gabriel Valley and has his home in escrow. Like many other Southern California sellers, he received a lot of offers. The highest offer was more than $100,000.00 over all the others. Of course, he picked that one. When it came time for that buyer to get his money to escrow, it never arrived. The money was due three days after he took the offer, and when it didn’t make it there, it took another couple of days to determine that this buyer had changed their mind. His agent then needed to scramble back to the other buyers. His Realtor says this happens a lot. I hope you can shed some light on why a buyer would make an offer and back out.
Rebecca
Dear Rebecca,
I, too, have had this happen to me more than once. The real estate contract defaults to allow the buyer three days to get their deposit to escrow. I typically write a counteroffer amending the three days to one business day. When I am particularly skeptical of a buyer or their agent, I further amend the counteroffer that the buyer needs to provide proof that the wire was initiated within one business day.
When representing a La Crescenta buyer several years ago, we were outbid by $150,000. The seller’s agent allowed my client to match the offer. But I advised my client that the home was not worth another $150,000. Fortunately, the first buyer did precisely what you mention. His deposit never made it to escrow, and my client got the house. So, why does a buyer make an offer and then back out?
In my situation, I believe the first buyer was overly aggressive and then regretted it. Another reason buyers don’t perform is that they have made offers on more than one home. The market is so competitive that buyers feel they need to increase their odds by writing as many offers as possible. With offer deadlines and negotiations, it can take days to learn if your offer is accepted.
It’s a shame when the buyer does this because we are showing our selling clients a high number and then taking it away from them—best of luck to you and your son.
