How to prevent home seller's remorse

Backing out of deal brings legal consequences
By: Robert J. Bruss: Inman News
Have you ever sold a house or condominium you later regretted selling? I have. Looking back, I wish I still owned some of the houses and condos I sold.

This situation is known in the real estate sales business as "seller's remorse."

It occurs quite frequently, usually within a day or two after a home seller accepts a buyer's purchase offer. But smart listing agents are prepared to anticipate and successfully treat this widespread home seller disease.

THE BEST WAY TO PREVENT HOME SELLER'S REMORSE. The decision to sell a home is rarely made in haste. The seller(s) usually think about it for many weeks and months before deciding to sell.

Real estate agents often play a key role, when taking a listing of a house or condo for sale, in determining the seller's strong or weak sales motivations.

Even when the seller's motivation is strong, such as moving to a new city because of a job transfer or moving to a nicer home, there is still the possibility home seller's remorse might strike.

But this disease is most likely to occur when the motive for the home sale is weak, such as earning a tax-free profit (up to $250,000 for a single home owner or up to $500,000 for a qualified married couple) without having another residence lined up for purchase or rental.

The most effective way for home sellers, and their real estate listing agents, to prevent seller's remorse is to take out a blank sheet of paper, draw a line down the middle, and then list the reasons for selling on one side of the line and the reasons for not selling on the other side.

Personally, I've used this technique, often called the "Ben Franklin Method," many times to reach major decisions. The number of reasons on each side doesn't matter. What really counts is the importance or weight given to each reason.

For example, suppose the primary reason for selling your home is you need tax-free cash, but you enjoy your home very much and don't have a place to move lined up yet. The Ben Franklin Method will help you think of alternatives to selling, such as refinancing to take out tax-free cash, or perhaps adding a home equity credit line instead of selling.

WHAT TO DO AFTER SELLER'S REMORSE STRIKES. Experienced real estate agents usually have dozens of stories to tell about what happens if, despite their preventative efforts, seller's remorse still strikes their home sellers. The disease most often occurs in two primary situations:

(1) Sometimes the disease strikes shortly after the home seller signed the listing contract with a realty agent. As the seller prepares the residence for sale, such as cleaning out the closets and throwing away years of memories, the seller often incurs second thoughts about selling.

At this point, if the home seller isn't strongly motivated to sell, the listing agent's best alternative is often to agree with the seller's request to cancel the listing. Working with a home seller who isn't highly motivated to sell is frequently a waste of time, as experienced agents know well.

(2) The second situation where home seller's remorse often strikes occurs shortly after the seller has accepted a buyer's purchase offer. This is the time when many sellers realize the sale is rapidly becoming a "done deal" and now it's time to move out.

During this 30-to-60-day period, home sellers often think about all the good times they enjoyed in their home, or how they will never be able to find another home as nice as their old one.

At this point, the seller's listing agent needs to do everything possible to hold the home sale together. Often all it takes is a friendly reminder to the seller of all the sales benefits, such as tax-free profits, moving to a different community, or whatever the primary home sales motivations might be.

However, occasionally the listing agent encounters a stubborn home seller who says, "I've changed my mind and I absolutely don't want to sell. Give the buyer their deposit money back. I'm not moving."

As a home buyer, I recall once encountering this situation. The seller's listing agent phoned my buyer's agent to say the sellers decided not to sell. When I learned of this, I asked my buyer's agent if it would be all right if I phoned the listing agent to point out the seller's consequences of canceling the sale. Of course, she agreed.

When I talked with the seller's listing agent, I reminded him we have a legally binding sales contract and I intend to perform my side of the sale and I expect the sellers to perform their side.

Then I politely informed him that if his sellers don't deliver the deed as agreed I would have no other alternative but to sue for specific performance of the contract and to record a "lis pendens" against the title to prevent the seller from selling to another buyer or refinancing the property.

Within a few hours, the seller's listing agent phoned to tell me he reminded the sellers of all the benefits of selling and that they would honor the sales contract as agreed.

I learned from that experience why it is so important for real estate agents, as well as their sellers and buyers, to understand the possible legal consequences if seller's remorse strikes and the seller refuses to back out or change the terms of the sales contract. For more details on the possible legal results of a breach of contract by either the home seller or buyer, please consult a local real estate attorney.

SUMMARY: Home seller's remorse, while not routine with many home sellers, is not an unusual occurrence. Real estate agents should be prepared to anticipate the situation and counsel sellers about the possible consequences of backing out of a home sale.