I got the idea for this blog post from a search thread that lead someone to Kiss and Sell that said:”My buyer has cold feet.”
Ahh, yes. Cold feet. They seem to afflict every buyer at some point along the purchase process. The question is, how do you handle it?
Well, for the realtor, the response really depends what point the buyer is at with the sale purchase. I’ve had buyers contemplate backing out before presenting an offer, after presenting an offer, during the conditional phase (when we were getting home inspections done and fulfilling other conditions of sale), and right up to the point of sale. So here are my thoughts on this very natural emotional reaction.
1) Before the offer. Buyers are conflicted. Should I buy? Can I afford this? Am I doing the right thing? My experience is that when a buyer finds the right property, those doubts vanish. It’s a little bit like dating. When you find the right person, you can overlook almost any flaw. When you haven’t, that’s all you can think about.
As a realtor, I want my clients to find the perfect property; one they fall in love with. If they’re not sure, maybe it isn’t the house for them. On the other hand, if we’ve been to dozens of properties and they still can’t make up their mind, they may just not be ready to make a move. So I don’t push. I give them space to make adult, informed decisions and let them know I’ll be there when they’re ready to move ahead. (But I’ll also call a “time out” if we’ve been to lots of properties that meet everything on their wishlist and nothing is working for them. In that situation it’s not the showings that are the problem, but buyers who aren’t ready.)
2) After the offer. Now the pressure is on because the buyers have stepped up to the plate and have actually presented an offer. What happens next — the seller accepting, rejecting, or countering that offer — is out of their control. If they get cold feet here while we’re waiting to hear back, I have to explain to them that if the sellers accept the offer, they may be stuck (depending on the conditions we’ve included). But I also let them know that it’s not uncommon to be freaked out, and that almost all buyers I know go through that “oh my God, what have I done” phase, even after acceptance. Sometimes a second or third visit to the property is all it takes for them to remember why they were so excited about making an offer in the first place.
3) During conditions. The buyers may find something out during the conditional phase that makes them uneasy. It might be something that pops up during the home inspection, like signs of water damage, or bad news about the costs involved in financing.
This is a legitimate time to act on those cold feet if they’re not absolutely satisfied because if they don’t, they are contractually bound. If properly drafted, the conditional offer lets them exercise their absolute discretion if the home inspection finds something they don’t like or they can’t get the financing on terms that are right for them. Sometimes they can negotiate a lower price if the home inspection turns up something unexpected, but they don’t have to; they can walk away.
I’ve had buyers walk away from deals during this part of the buying process, and in each case, it was absolutely the right decision to make. It wasn’t based on emotion, but solid, objective facts. In almost each case, the buyers went on to find that perfect property, the one they walked in the door and fell in love with.
4) After conditions have been removed. This is where getting cold feet isn’t just an emotional reaction but a legal one, since it can be a potential lawsuit. At this point, the deal is firm. Unless there’s a very good reason for a change of heart (for example, a undisclosed material fact concealed by the seller and discovered by the buyer), there is often no legal basis to back out.
Buyer lost their job? Too bad; they removed the condition of financing and the seller sold them the house firm. Found something they liked better? They’ll have to settle for second-best; a change of heart carries no weight when it comes to breach of contract.
If the seller doesn’t agree to terminate the deal (and most won’t), the buyer can expect to have their deposit tied up while the lawyers fight this one out. They can either be forced by a court to close the deal (that’s called specific performance) or find themselves ordered to pay all the seller’s costs of having to re-list and resell the property, including any difference in what the original buyers agreed to pay and what the sellers ended up accepting. Most buyers will settle, but it won’t be cheap — it could cost thousands of dollars. You may be experiencing a change of heart, and that’s normal, but acting on it will be costly.
The good news is that cold feet are common and even experienced buyers will have bouts of “buyers remorse.” We all second-guess ourselves. Most buyers get over it, and luckily, only a very few walk away from a purchase, although it does happen from time to time.
If you’re a seller, don’t lose sleep imagining that your deal may be the one to fall apart, but also know that a sale isn’t ever final until the money is in the bank.
And if you’re a buyer, try to get your jitters out of the way before you tell your realtor to draw up and present that offer. Buying a house should be like finding Mr. (or Ms.) Right — something you are happy and excited about. If you’re feeling sick to your stomach, the time to let the sellers down is before you get too far into this, instead of jilting them at the altar.