A House Went Under Contract Twice and Came Back on the Market. Red Flag? (What I Check Before My Buyer Writes an Offer)

Part of: The Complete Guide to Buying a Home in Montgomery County, MD

A buyer sends me a listing they love. The photos are great, the price looks fair — and the history shows it went under contract, came back on the market, went under contract again, and came back again. "Is that a red flag?"

Short version: once is usually a buyer problem. Twice is usually a house problem. Here's how I actually work through it.

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One fall-through vs. two

A single failed contract has a lot of innocent explanations, and most of them live on the buyer's side:

• Financing fell apart — the loan wasn't approved, the buyer's job changed, the pre-approval was weaker than it looked.
• The appraisal came in low and the two sides couldn't agree (what happens when that occurs).
• Cold feet, a divorce, a job transfer, a home-sale contingency on the buyer's own house that didn't close.

None of that tells you anything about the house. Plenty of great homes in Montgomery County lose a buyer once.

Two failed contracts is different. The odds that two separate buyers both couldn't get financed are slim. When two people got far enough to go under contract and both chose to walk, the most common reason is something they found after going under contract — which means the inspection. That's a condition red flag until proven otherwise.

The first thing I do: call the listing agent

Before I read tea leaves, I pick up the phone. I ask the listing agent directly what happened with the prior contracts. Agents are allowed to tell you a lot: whether it was financing, an inspection, an appraisal, or a buyer-side issue, and often what the inspection turned up.

Two things to know about that call:

1. Most agents answer honestly — they want the third contract to stick, and a buyer who walks after discovering the same problem wastes everyone's time.
2. Some agents shade the story to protect their seller. "Buyer got cold feet" can be true, or it can be what you say instead of "the inspector found a foundation crack." So I take the answer as a starting point, not a conclusion, and verify it.

In Maryland, sellers must disclose known material defects on the state form (Maryland REALTORS® disclosure resources) — here's how the disclosure form works. If a previous buyer's inspection revealed a defect and the seller now knows about it, that's generally a disclosure obligation. Ask whether the disclosure has been updated since the last contract fell through. If it hasn't and the story is "inspection issues," that's a second red flag.

What I look at in the showing before we spend money

An inspection in Montgomery County runs $500–$1,000 depending on size and add-ons (radon, sewer scope, termite). I don't want my client spending that only to discover what the last two buyers discovered. So on a twice-failed listing, I walk the house looking specifically at the big-ticket items:

• Foundation and structure — cracks in the basement walls, doors that don't close square, sloping floors, evidence of water intrusion in the basement (staining, efflorescence, a dehumidifier running).
• Roof — age, visible wear, ceiling stains on the top floor.
• HVAC — age of the units, whether they're running, water heater age. In this region, a 20-year-old system is a negotiation, not a surprise.
• Water and drainage — grading toward the house, gutter discharge, sump pump.
• Anything freshly patched or painted in one spot — the oldest trick is covering the evidence.

If those check out and the listing agent's explanation is consistent with what I see, we write the offer. If something's off, we either write with terms that protect the client — a full inspection contingency, a longer inspection window, and a price that already reflects the likely finding — or we move on. There's enough inventory in the county right now that no buyer needs to force a bad house to work.

How "back on market" changes the negotiation

A twice-failed listing is, quietly, a motivated seller. They've lost weeks or months, their days-on-market count has ballooned, and buyers' agents are all asking the same question you are. That gives you leverage:

• Full inspection contingency, no waivers. Whatever the market, this house doesn't get an "as-is" offer from my client.
• Ask for the previous inspection report. Sellers sometimes have it (buyers occasionally share it). If the seller won't share what they know, factor that in.
• Price to the condition, not the list. If the prior inspections found a $15,000 roof, the price should reflect it — or the seller should fix it before closing.
• Watch the earnest money. Make sure the contingency language gets your client's deposit back cleanly if the inspection goes badly (how EMD works in Maryland).

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Frequently Asked Questions

Is a house that has been back on the market twice a red flag?

Usually, yes. One fell-through contract most often reflects a buyer issue — financing, appraisal, or a change of plans. Two buyers walking away after going under contract usually points to something found in inspection. Treat it as a condition question until the listing agent's explanation and your own walkthrough say otherwise.

Why would a house go back on the market after being under contract?

Common reasons: the buyer's financing was denied, the appraisal came in below the contract price and the parties couldn't agree, the buyer's inspection found problems and they exercised their contingency, or the buyer had a personal change (job, divorce, their own home sale falling through).

Can I find out why the previous contract fell through?

Ask the listing agent — they're often allowed to tell you the general reason and sometimes the specifics. In Maryland, if a prior inspection revealed a material defect the seller now knows about, it should appear on an updated seller disclosure. Verify the agent's account against the disclosure and your own walkthrough.

Should I still make an offer on a house that fell out of contract twice?

If the explanation checks out and the big-ticket items (foundation, roof, HVAC, water) look sound, yes — often at a better price, because the seller is motivated. Keep a full inspection contingency and price to the condition. If the story doesn't add up, there's enough inventory to walk away.

How much does a home inspection cost in Montgomery County?

Typically $500–$1,000 depending on the size of the home and add-ons like radon testing, sewer scope, and termite inspection. On a twice-failed listing I try to rule out obvious deal-breakers during the showing so that money is spent on a house worth buying.

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Edward Dumitrache is a REALTOR® with Pearson Smith Realty, licensed in MD, DC, and VA, with 100+ transactions in the DC metro since 2016. Looking at a listing with a complicated history? Send it to me — I'll make the call and tell you what I find. Home inspection basics: American Society of Home Inspectors.