Avoiding Buyer's Remorse

Homebuyers have second thoughts often enough that there's even a name for the condition: buyer's remorse. Buyers may worry that they made a wrong choice, paid too much, or failed to see a major flaw.

Sellers also can have second thoughts. They may decide they really don't want to move, or that they should have held out for a better price, or that the buyer is too unsavory to inflict upon neighbors.

Acting on those second thoughts is fairly uncommon--and becoming less so, thanks to buyer education and home inspections--but when a buyer or seller has a change of mind, faces get grim, reports the Minneapolis-St. Paul Star Tribune. It is possible to get out of a purchase agreement. But it can be quite unpleasant.

"This is far and away the exception rather than the rule," said Don Smith, general counsel to the Minnesota Association of Realtors (MAR). But even so, "people need to know about this...because it does happen, and when it does, it's traumatic and potentially expensive."

The prudent buyer or seller should do enough homework to avoid getting into such a mess. Smith, who said he gets "a fair amount of these cases referred to me," said home sales are unlike some categories of purchases for which buyers have a three-day period in which to change their minds.

Homebuyers and sellers must "start with the proposition that once they sign a contract, they're committing themselves to abiding by the terms of the agreement and carrying the agreement out to closing," Smith said. In other words, an accepted, signed purchase agreement is a done deal, subject to attached contingencies such as a buyer-paid inspection.

The purchase agreement is a contract that can be enforced in court, although real-estate agents normally try hard to keep disagreements from getting to that stage.

If the buyer wants out, the agents should have "a good open conversation (to) see how both parties really feel about it"--probably without emotionally charged clients present--"and see if the sellers will let them out," said Kevin Ries, president-elect of the Minneapolis Area Association of Realtors.

"Find out really what the issues are, and find out if it's something they can resolve," said Ries, a Minneapolis real-estate agent. "Maybe they're getting cold feet because the appliances were overlooked in negotiating the sale and they can accommodate (that) by negotiating."

A desire to cancel is resolved most often with negotiation, several agents said. Matt Baker, manager of a Coldwell Banker office, said lawsuits are rare because they are costly and prolonged, tying the hands of both parties--people who want to buy or sell but then can't.

Fortunately, agents say, they're not caught in cancellation situations very often. "Fewer and fewer deals fall through," Ries said, crediting the widespread practices of buyer-paid professional inspections and prequalification of buyers for loans.

Ries estimated that buyers and sellers try to cancel less than 1 percent of the time, with the most-frequent request coming from buyers whose job situations change.

There are legitimate reasons to cancel a purchase agreement but usually they're included in the agreement itself. Prominent examples are the buyer's failure to secure financing and irresolvable differences after an inspection for which there is a contingency.

Other reasons often invoked won't work if either party is unwilling to relent. Sometimes buyers simply change their minds about the house. That, agents say, is why they try to teach buyers about the market.

"If the agent has done a good job with them, they've selected the right house and the right price range," Ries said. "As a seasoned agent, you can kind of sense if people are comfortable with their decision." When he senses that buyers feel uneasy about making an offer, "I tell them to go home and sleep on it. The last thing I want to do is try to untangle a purchase agreement."