Bad sign if a property has gone back on the market multiple times?

Question

We were recently looking into a 4-plex in Tualatin, OR listed at $395,000.  I've driven by the property and the surrounding area and it's in a great spot, and the total rental income is listed at $3,700 a month.  The listing agent sent us the financial records and the rent checks out, so from what I can tell it would be a great buy for this area even at the asking price.  We made an offer and they went with another buyer.  A few weeks later it popped up again on the MLS back on the market.  We put in another offer and they went with another buyer again.  Just yesterday it went back on the market again.  That's twice in 2 months that the property has gone back on the market because the buyers are backing out for one reason or another.  Should I be concerned about the property going back on the market multiple times or should I put in another offer?  If so, should I try to put in a competitive offer or should I put in a lower offer?

Jesse T. · Answer

It could well be that the problem is the potential buyers.  Do you know who they were or who their agent was?

Did you look into having your offer accepted as a back-up offer?

I would ask for the results from any appraisal or inspections done on the property.  If there is something big, they might be upfront rather than losing a 3rd deal.

Paul Spangler · Answer

We found out that the two original buyers were cash buyers and backed out after inspection of the property. We went to an open house and saw the nicest unit, which looked dated but not too bad. We were told that two of the units will need new carpet, paint, kitchen and bath remodel (at least). The last unit is in okay condition.

It's in a blue collar area and there are many multifamily houses around so we wouldn't want to fix it up too nicely if we got it.

Given that the other buyers backed out after inspection, should we put in another offer? We are estimating around $20k in repairs to get everything looking good again. One of the units is vacant but the others have tenants right now.

Mark Mosch · Answer

You should also check with the broker and actually find out why it fell out.  It could be for totally explainable reasons and still be a good deal.  I had a property in escrow that fell out right before we were going to close because the buyer suddenly lost their job and no longer could get approved for financing.  There's all sorts of reasons why - see if you can get to the bottom of the reason before you just walk away from a deal.

Bill Fennelly · Answer

Is OR and full disclosure State, like MA, if so the broker would be required to tell you problems that arose from the prior home inspections...clearly it would be wise to have your own, but if you ask the broker directly, he/she may tell you what the issues were...just my opinion !

Jesse T. · Answer

I would assume that the repairs needed are much more than that.  Maybe 1 deal falls apart over repairs of about 5% of property values.  However to have 2 deals fall apart for the repairs would indicate to me the inspections indicate a serious issue or many significant ones.

What are the ages on the roof and HVAC?

At the very least I would want to see the inspection reports before making an offer.  If the reports are not availabel, I would ask them to take the house off the MLS for a brief time to allow me to do an inspection before making an offer.  You do risk "wasting" the cost of the inspection if you can't agree on a price.  However I think you have more leverage in negotiations before the contract price has been determined.  It helps them too because it prevents them from falling out of contract for a 3rd time.

If they won't go for that, maybe make an offer with 10% of the price in escrow to go towards repairs.  I would have a lawyer draw the agreement up since it is a little more complicated than the standard contract.  Also you would need to have sufficient cash for this approach.

Ronnie Wilson · Answer

Could be any number of reasons. Check with the broker and find out why it fell through. You might find that the buyers didn't back out of the deal but could no longer obtain financing.

Joyce Tavares · Answer

Definitely check with the broker....could be a lot of things from financing to looking at the termite report....

Good luck...3rd times a charm??  :0)

Bad sign if a property has gone back on the market multiple times?

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