Falling Out Isn't Fatal, Not Fun Either

By Dave Fratello | June 25th, 2019

Going into escrow is a good feeling.

The buyers are happy because they finally found a place.

Sellers are happy because they're able to move on, maybe make a little money.

But it doesn't always work out.

There can be inspection problems, financing problems, change-of-mind or change-of-circumstances problems. Maybe the buyer couldn't sell an existing home to make a move work. Sometimes, the buyer never even puts down a deposit or starts inspections, hinting at a bad-faith problem.

Whatever the cause, sometimes properties fall out of escrow.

Then the seller has a legitimate worry: Is my listing going to be "stigmatized" somehow once it returns to market?

The good news is that many properties do sell after the near-death experience of a failed escrow.

Consider some recent cases:

409 4th Street Manhattan Beach CA409 4th (3br/3ba, 3150 sqft.) is a family walkstreet Spanish with 2br and a den downstairs, master and living spaces upstairs.

This one began last August at $4.499M and didn't sell, then cut the price to $3.999M in March this year. This drew an offer and began a 2-week escrow that flopped. The home came back to market at $3.899M.

However, that first accepted offer had helped establish the market for the home, which had been tough over the months.

A week later, they had a new deal that stuck.

The sale closed at $3.825M five weeks after the first failed escrow.

1151 9th Street Manhattan Beach CAA one-level SFR at 1151 9th (3br/3ba, 2675 sqft.) fell out of escrow in both March and April this year, but within 2 weeks of its last failure, made a new deal that worked out. (Sold price: $1.885M last week.)

A 3br Tree Section cottage at 1148 Elm (3br/2ba, 1675 sqft.) has hung around since November last year. They drew an offer in December, but lost it. Another offer was accepted in March this year, but that flopped, too.

With a new agent, and the lowest price yet ($1.549M), this one made a deal last week.

2300 Manhattan Avenue Manhattan Beach CAA corner-lot SFR at 2300 Manhattan Ave. (3br/2ba, 1800 sqft.) launched in March this year at $3.050M, and accepted an offer within a week.

It didn't pan out, but the listing came back to market with a bold $50K jump in price. (Not exactly sitting in the corner licking their wounds, were they?)

One week later, there was a new buyer, back at the original full price, and it closed for $3.050M in May.

So, you see, it can all work out fine.

But there are some homes on the market now that recently fell out of escrow, still looking for the next good offer.

One simple way to track these is using the search feature of the MB Property Ticker. You could go to the full Ticker feed at this link, then tick the box for "Out of Escrow" and hit "Search Ticker."

Or just use this link now and you can see the search results.

Among the recent listings to come back:

228 33rd Street Manhattan Beach CA228 33rd (3br/3ba, 1640 sqft.), a view SFR just west of Highland.

The escrow lasted only 3 days (yikes), and, as our Ticker note makes clear, upon coming back to market the listing took an immediate $300K price reduction to $2.899M.

Similarly, the Tree Section home at 608 29th (4br/3ba, 2975 sqft.), listed at $2.999M now after a start last September, was in escrow about 4 days in early June, but is back now.

1541 19th Street Manhattan Beach CAAnd in East Manhattan, a Roth home at 1541 19th (4br/2ba, 2300 sqft.) launched in April and made a quick deal.

That deal lasted 2 weeks, and it came back to market. They hadn't yet staged the home, seeing the quick interest. Now, nearing the end of 2 months, the home has staging and is looking for that next buyer. (List: $1.895M.)

Scanning a few pages' worth of those failed escrows, we see right away that most listings emerge from the trauma and get sold later.

We've had experiences when a listing's fall from escrow was simply too ill-timed and exhausting for the sellers. Everyone needed a break.

But we've also seen... Things usually work out.

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