Avoiding Buyer Remorse
In this market, many buyers are blindly submitting offers and waiving home inspections to compete. They may win the bidding war, but they often end up with buyer remorse once they move in. Unfortunately, there’s no return policy on a house.
Buyer remorse is common whenever someone makes a major purchase. With real estate being such a sizable investment in someone’s portfolio, you can expect almost every buyer to have some remorse.
What is buyer remorse?
Psychologists say that as human beings, we often want different things simultaneously. For instance, we want to buy a house, and we also want to travel and eat out. The moment we commit to one choice (buying a house), we can no longer afford our other choice (fun lifestyle) and we worry that choice #2 would have made us happier.
If you sense this with your buyers, sit them down and remind them of all the reasons WHY they decided to buy (do they now have a shorter commute to work, are they in a better school district, do they have the staycation backyard they always wanted). This often reassures them that they made the right choice.
Here are some of the most common reasons for buyer remorse and how you can help your clients get past it.
THEY GOT SWEPT UP IN THE MARKET FRENZY
It’s easy for buyers to get caught up in the auction environment and feel that they need to win the competition. They are worried that house prices will continue to rise and if they don’t buy something now, they won’t be able to afford it. This causes buyers to make snap decisions and put offers in on houses that are less than ideal. They are often happy they got the house, only to be disappointed once they move in and realize the house doesn’t have all the amenities they need. At the end of the day, if your clients buy a house they’re not happy with, they blame you. Before you submit an offer, remind clients of their wants/needs list, so they understand what they are compromising on.
THEY FEEL THEY PAID TOO MUCH
In today’s market, many agents are listing houses below market value to generate multiple offers and drive the price up. Buyers end up disappointed because the list price is nowhere near the sale price. When a property comes on the market that is priced at market value, potential buyers don’t even look at it because they expect it to sell for $100,000 over asking. Agents have created this situation by encouraging sellers to price aggressively. I teach agents to use this pricing strategy in a hot market because your responsibility as the listing agent is to get as much money as possible for your sellers. As a buyer agent it is your responsibility to ensure your buyers don’t overpay for a property. To do this, you must have an intimate understanding of recent comparable sales, so you can advise your buyers whether a property is listed under, at, or above market value. Do your own CMA on the property and walk your buyers through the comparable properties, so they can make a wise choice.
UNEXPECTED MAINTENANCE COSTS
Over the years, agents have become dismissive about the importance of understanding basic construction. Some agents couldn’t tell the different between a 60-amp, 100-amp or 200-amp panel. I’m not suggesting you need to be an electrician, or give anyone advice on these issues, but you should know enough about basic construction to understand when the property has issues that need to be looked at by an expert. Many agents are advising buyers to waive home inspections on their offers to be more competitive. Once the buyers have paid top dollar for the house, they often have a limited budget to pay for unexpected repairs, but by then it is too late. They blame you for selling them a defective house. Protect your buyers, and yourself, by encouraging buyers to include a home inspection in their offer. If time is of the essence, you may want to have a home inspector on call to accompany you on the showing before you put in an offer. A seasoned agent should be able to spot most potential issues without an inspection, but to have a greater understanding about home construction, I encourage you to attend your next few home inspections and ask the inspector a lot of questions about what they look for and potential fixes and their costs.
FAMILY & FRIENDS CAUSE THEM TO SECOND GUESS THEIR CHOICE
It is normal for parents to want to safeguard their children, and for friends to want to protect friends. Often people can be critical of other’s decisions without understanding their house-hunting journey. Unless someone has come through the process with you, they can be critical of your decisions. If your buyers encounter these conversations after they buy, they can second guess your advice. To avoid this, prepare your buyers for these potential conversations. Remind them of all the reasons why buying the house was a great decision, so they can defend their decision to friends and family. They may have paid a premium BUT:
* the house met everything on their wants/needs list
* with interest rates so low, their monthly payment is affordable
* over time house prices will continue to rise building their equity
* Millennials may want to move into a Pinterest-ready house, but the reality is, first-time houses typically require some elbow-grease.
THEY DON’T LIKE THE LOCATION
Buyer remorse doesn’t always happen because they think they paid too much. Sometimes they move in and quickly realize their bought in the wrong location. Maybe they are near a railway line, trains run all night, and they can’t sleep. Buying in the wrong location is a tough one to fix. To avoid this situation, it is important to be a hyper-local expert, so you can advise clients on things like noise disturbances nearby. To some people this would be a deal breaker, but to others it wouldn’t be. As their trusted advisor, they expect you to know this stuff and bring it to their attention.
It is helpful to remember that buyer remorse is normal when people make a substantial purchase. It happens when we buy furniture, a new car, and especially a new house. It is easy for doubt to creep in. When it happens, sit your buyers down, listen to their concerns, and remind them of all the reasons they decided to buy to reassure them.
If you want to improve your sales skills in 2021, check out https://leadersedgetraining.com/virtual-training.
Chris Leader
President
Leader’s Edge Training