Although I doubt there has ever been an official study on the topic, I feel confident in stating that one of the biggest transaction killers in the real estate industry is buyer’s remorse. It is an objection based entirely on fear and anxiety and never wears its own face but rather bears the disguise of weak excuses and feelings.
Let’s think through remorse management in the real estate industry.
False Evidence Appearing Real
This is not a “Bryan original” but this definition of FEAR is fitting for this context. Buyer’s remorse is an irrational fear of the buyer that they are making a bad decision in buying the property. I say it is irrational because the buyer has:
At the end of that process feeling fear in proceeding is irrational when no evidence that the decision is wrong presents itself.
Preparation is the key
Irrational fears do appear real and cause people to do crazy things. How many people see a bee and run screaming with their hands in the air? Or as a client once told me, “If I see a mouse in this house our only option is to burn it down and start over!”. Seems a touch irrational in response I’d say.
Real estate is a big purchase and normally tied to a long-term financial mortgage commitment so there will always be some anxiety for every buyer, experienced or otherwise. The best practice is to have a buyer’s remorse conversation with the buyer(s) at the time of writing the offer when they are excited about their decision. Don’t wait until the remorse sets in and then try and manage it or your motivations come into question and trust begins to erode spoiling the future of the relationship.
The conversation
My personal version of the preparatory conversation went something like this:
“Mr and Mrs. Buyer, I am glad that we have been able to find you the perfect place for you and I can tell you are excited about the prospect of owning this home but there is one danger I need to warn you about. At this moment you may feel that this conversation is a silly one, but I have been doing this work long enough to know that buyer’s remorse lurks in the shadow of every home purchase waiting to destroy the excitement and anticipation you feel right now. It doesn’t happen to everyone the same but by way of warning, there is a possibility that once we get this purchase contract agreed to and signed, you will lay awake at night and imagine every worst-case scenario that could happen to you. Hit by a bus and can’t move in, lose your job, and can’t pay your bills, a meteorite falls from the sky in your new back yard and the government locks down the property and forces you to live in a tent under a bridge while they evaluate the situation. It is normal to feel this way, it is the way your brain comes to terms with a big life decision and rarely lasts longer than 3 days.
As long as you recognize this is a possibility and that it will pass normally within 3 days, you can bear it and then start mentally placing furniture in the home as your excitement returns. You are making a good decision based on the research we have done, the homes we have viewed, and the financing you have been pre-qualified for. If this happens to you and it lasts more than 3 days, call me directly and we can talk through your concerns, but in my experience just knowing this feeling is normal will help you recognize it and manage your emotional response.”
Every Client, every time
Some of you reading this may use this for first-time buyers, or particularly nervous buyers, but in my experience, there is no way to predict when or whom buyer’s remorse will hit and how hard. For this reason, I made it part of my process with all buyers regardless of experience, age, gender, financial status, or level of knowledge. And many times, I have had the most unlikely clients tell me at the home inspection that they were glad we had that chat about buyer’s remorse because it hit them hard and their spouse was able to remind them about the conversation. Some may laugh it off or be macho about the suggestion that they may be afraid of a purchase but in the quiet of the night, they will appreciate the fact that they were prepped ahead of time.
Are there times when a buyer’s fears may be real and circumstances specific to them may shift requiring a conversation with the REALTOR® but that is generally the anomaly by the time the buyer has run through the whole process of seeking, finding, and negotiating on a property.
Don’t get caught by buyer's remorse when it can be self-managed by the client if they are prepared for it. As a final warning, the buyer who does succumb to buyer’s remorse and ends up walking away from a property they should have purchased will be the most impossible client to help to find another property that was the same as the one that got away. An ounce of prevention in this area is certainly worth a pound of the cure!