NAR reported that according to the Realtors® Confidence Index, one of the causes in increased settelement cancellation rates is BUYERS’ COLD FEET (source:http://economistsoutlook.blogs.realtor.org/2011/12/05/settlement-delays-and-cancellations-increase/).
A first-hand experience with my actual clients helped me relate to this problem. During the 60-day deadline stipulated on a short sale contingency contract, I knew that my buyers eyes were peeled on the computer arduously everyday to watch the market trend of homes similar to what they put an offer on. We looked at two more houses while awating for the bank’s response. I was not against the showings.
Actually, I was all for it because as realtors, we know the length of time involved in a short sale. I supported the back up plan in case nothing happened within the 60-day grace period.
The stop watch was brought to a mini halt ten days before the deadline when the listing agent advised me that I should have the bank approval within a couple of days. I broke the good news to the buyers.
Surprisingly, the buyers were not too enthusiastic upon hearing the good news. Well, for me, it was great news. Getting a bank approval in less than sixty days especially if it involved two lien holders was a breakthough considering the difference between the outstanding balance and the purchase price, which was approximately $40,000 plus the additional costs to be incurred by the banks like commission,settlement fees, etc.
Now, my head wanted to spin. Why the change suddenly? Did they see new homes at bargain price that losing their deposit would not matter anyhow? As their realtor, my mind told me that if it would be for their best interest, I should find out and give them the opportunity to change their mind. However, on the on other hand, my crude existence was yelling, “NO”. Do you really want to start all over again?”
My fiduciary duty prevailed, which should be the case at all times. So I called them to feel their COLD FEET and check if warming them up would be best for them or not. During the course of our conversation, the buyers mentioned that they were a little bit disappointed with the bank because of the counter offer it proposed prior to the bank approval of additional $1000.
“Was that all? The bank, as I have explained in our meeting, can reject or make a counter offer and this is to be expected.” I have to remind them of this to trigger their memory. I continued by asking if they found another property they were interested in and if the property they could be owning soon was no longer the home they wanted to pursue. I augmented the statement by letting them know that I checked the market inventory and there was nothing out there that they could fetch for a good price and condition as the house they are commited to buy.
Moreover, I have to add that if they expect for the price of the houses to drop more and that waiting could give them a better deal, I countered that speculation by pointing out that the mortgage interest rates which were at their historical lows could no longer be available when they find another house. I refreshed their memory of the house by enumerating the reasons why they chose it from the rest.
When I talked to them again after getting the bank approval in writing, their tone of voice was more motivated and delighted. The feet were warmer–out of the cold.
Sometimes, all we need as realtors is to warm up the buyers’ feet by educating them— and giving them a refresher’s course. These should freshen them up–ready for that warm and fuzzy feeling again.