If there was an issue materially affecting the value of the home, all real estate agents have to reveal that information. Any other issues or terms will stay with the seller and the listing agent. The listing agent is working in the best interests of the sellers and the terms of previous offers are confidential information between the owner and the listing agent.
The buyers agent are working in the best interests of the buyers. It is normal that they would want to know the answer to that question. As long as there is no material defects to the property, there is no explanations due. It is up to the Buyers Agent and the buyer to decide the best terms and offer they want to place on the home.

I don't know the laws and rules in New York (where this question was asked), so it may well be different than Illinois.

But here in Illinois, I am not required to disclose why the buyer withdrew their offer. Even if they withdrew because the roof is 15 years old. As long as the roof is not currently leaking, I am not required to disclose that the buyers decided they didn't want a 15 year old roof, and the sellers weren't willing to credit them, for a brand-new one.

If the roof is leaking I am, of course, required to disclose that. But as long as the system is in working order and performing the function for which it was designed, regardless of it's age or condition, it is not an inspection issue in Illinois. This would apply to roofs (still holding out the water, even though it's 35 years old), a working 30 year old furnace, a functioning 12 year old water heater... well, you get the idea.

That doesn't mean we can lie about their age... but it does mean that we are not obligated to replace them or credit for them as a condition of the inspection. We may "choose" to, in order to hold the deal together... but we are not required to.

No.

As mentioned below, you and your agent are obliged to disclose any defects uncovered by the previous buyer's inspection. The details of your negotiation do not have to be disclosed; if your first buyers wanted $25,000 to fix the roof and gutters, and you thought that unreasonable, you need only disclose the condition of the roof and gutters.

However. There are often times when it would be useful to explain why the last buyers backed out. Discuss this with your agent; it's my inclination to let your agent disclose anything that will be to your benefit.

All the best,

If you live in CA, the answer is yes. Full-disclosure is the name of the game. If there's something wrong with the house, and you know about it, you need to tell your potential Buyers. If this affects the price of the home, too bad. Otherwise, you, your agent, and your agent's broker are all at risk of a lawsuit.

If the issue was related to the inspection, that issue(s) should be revealed....

If you were under contract and the deal fell apart because of inspection issues and that is recorded in the file of record, then it may need to be disclosed.

Recommend that you discuss this with your agent and her broker of record.

Best,
Jeanne Feenick
Unwavering Commitment to Service, Unsurpassed Results

If the buyer's agent asks the question... they will be expecting SOME sort of answer... and hemming and hawing will not be adequate. Your agent isn't allowed to lie, but between the two of you, you can come up with an acceptable response.

Such as: The buyer got cold feet, or it just didn't work out. Sometimes if the inspection was very difficult, you can say "the buyer was expecting he was buying a NEW home". It is a bit of card-game, and you do need to keep your game-face on.

The question will be asked and a truthful answer is best. There are many truthful answers that won't compromise your interests like "Buyer got cold feet." You agent owes nothing to the buyers agent but you don't want the new buyers to think you are trying to hide something.

Your agent has a responsibility to maintain your confidentiality, and generally has no obligation to disclose information about a prior offer. The only exception would be in case of a material defect discovered by an appropriate professional, but be careful here...the opinion of a home inspector is just that...an opinion. In order to determine if there is truly a material defect in a given area of the home, a professional in that area ( I.e. roofer, electrician,) should be called in to confirm the 'defect'. Best of luck in the sale of your home!

Owe or deserve? That answer has been addressed below, just think it was not the right question.

I get this asked all the time when I have a listing that goes back to active. You pretty much know why they backed away, so to ever answer otherwise will be untrue. I am sure there are some cases where it's just buyer remorse with no explanation, but most often it is after a home inspection or something like that. The question is does the other agent, that will have a buyer with them, need to know? Would total need of repainting and new carpet be a material fact? I doubt it, so there would be no reason to tell them since it is not a material fact.

Not unless it was somehow related to a material defect in the home, a foundation crack or something of that nature, that would have to be disclosed anyway.

NO....depending on the agency relationship between the seller and the seller's agent, there is a limited degree of confidentiality between the two parties. In layman's terms, there is no reason to divulge the motivation of the other party.