How to Prevent Home Buyers from Cold Feet
For many people, a home is the most significant investment they’ll ever make. Because those purchase prices can be so big, though, many buyers get cold feet before the home buying process is complete. As an agent, what can you do to prevent home buyer’s remorse before closing? Can a buyer of a house back out before the transaction is complete? You can take several steps, and while a buyer can back out, making the right moves can help prevent a potential problem.
Can a Buyer of a House Actually Back Out?
It’s relatively unlikely that a buyer of a home will back out, but it does happen. In most cases, the buyer will back out before the offer is accepted or at least before the buyer and the seller sign the purchase agreement. However, once that purchase agreement is signed, it is a legally binding document, and both parties are bound to complete the sale under the terms outlined.
Backing out at this point is difficult, but there are usually contingencies that allow them to do so. For example, if a home inspection reveals a potential problem, the buyer is no longer legally obligated to purchase the home. Similarly, if the appraisal comes in at an amount lower than expected, the buyer may not have to purchase that property. Barring serious problems like those, though, the buyer could walk away, but they will lose their earnest money deposit should they choose to do so.
What You Can Do to Prevent Cold Feet
As a listing agent, you can take several steps to prevent a potential buyer from getting cold feet. Initially, you may want to make sure that any potential buyer is a qualified lead. While you cannot legally limit who sees the property, you can ask all kinds of questions to ensure that a potential buyer has identified the right price range.
Ask whether a buyer has already pre-qualified with a lender. If they haven’t yet, suggest that they do so before you begin showing them homes. During that process, a lender will help them make sure they can afford the payments and the potential real estate taxes in the area in which they’re searching for a property.
You could also consider conducting a buyer interview. You’re going to be spending quite a bit of time with these individuals showing them various properties, and that can lead to expenses on your part. Use this time to learn more about their motivations. If buyers aren’t quite as excited as you might expect, don’t push them to place an offer they’re not ready to make. The more you learn about their wants and needs before you show them various properties, the more you’ll understand just how motivated they are to stay with it after they’ve placed an offer.
Dealing with Cold Feet
If your potential home buyer comes to you with concern after they’ve already signed a contract, the deal isn’t off quite yet. You may still be able to calm them down and guide them toward this purchase. Start by simply listening. Most buyers get cold feet for a few different reasons. One of the biggest concerns is that the home is too expensive, and the mortgage payment might be higher than the rent they’re paying.
You can gently remind them at that point that the home isn’t too expensive because they’ve already gotten pre-approved by a mortgage company to purchase the home. What’s more, though, you might want to point out that there are several tax deductions associated with homeownership that typically make it a great deal to buy a home.
Some buyers, though, aren’t too concerned about the cost but fear that they may not like living in that home or that area after just a few months. In that case, remind them that it’s also possible they’ll love living in that space in those few months, and as they continue to personalize their home, they’re likely to love it even more than they imagined. You may also want to remind them of all the features they loved in that home. Whether it’s the room for their family to grow or the beautiful backyard, just hinting at what they might miss if they back out can be a powerful motivator.
No matter what the reason your potential buyers have cold feet, there’s so much you can do to offset their concerns. Simply listening to them throughout the entire process is a great way to connect and keep them on the path toward homeownership. Just reminding them of the great things packed into the property will usually help calm any pre-purchase jitters and keep your next contract on track to completion.