Sunday
September 25, 2016

How to Prevent Buyer's Remorse

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How to Prevent Buyer's Remorse

You have a critical role in making sure your clients don't regret their home purchase.

It’s not uncommon for home owners to suffer from buyer’s remorse after purchasing a house. Sometimes they discover a thing or two about the home they wish they had considered more carefully before buying — and sometimes they regret the whole transaction. Either way, it’s the real estate agent who usually takes the brunt of the blame. After all, you’re the one who found the house for the buyer.

Buyer’s remorse is “that awful feeling when you figure out something is wrong with the house or you could have done something better — or there’s a better house out there,” says Rhonda Duffy, broker-owner of Duffy Realty of Atlanta. “Agents need to take this seriously. Not everyone can buy a house, and for those who can, you should be rewarded with the luxury of having certainty and clarity — not confusion — in the home purchase.”

Who’s Most at Risk for Buyer’s Remorse?

A 2014 Redfin survey of more than 2,000 U.S. adults uncovered these insights as to who tends to have the highest levels of dissatisfaction after a real estate purchase.

By age: The older you are, the more confident you tend to be about your home purchase. Eighty-five percent of people ages 65 and older said they would buy their home again if given the chance, whereas 72 percent of those ages 18 to 64 said the same.

By region: Midwesterners said they had buyer’s remorse more frequently than other regions in the U.S. Twenty-eight percent of Midwestern home buyers said they had buyer’s remorse, compared with 27 percent in the Northeast, 25 percent in the South, and 20 percent in the West.

By demographics: Women (27 percent) were more likely than men to express higher levels of buyer regret, as were people who have children under the age of 18 (28 percent).

By income: The wealthier you are, the less regret you have. Households with an income of $100,000 or higher tended to express more satisfaction with their homes (86 percent) than those who made less than $100,000 (70 percent).

Source: Redfin

Duffy learned that important lesson from her neighbor, who didn’t find out about his home’s history until after he already moved in. At a neighborhood barbecue, someone told him that the previous owner committed suicide in the house. Though Duffy wasn’t his agent, the neighbor approached her with the newly discovered information, saying he now felt uneasy about his purchase.

“I never want one of my clients to feel that way,” Duffy says. “He could have found this out beforehand and made a choice of whether he was comfortable knowing that information. But to find out something after the fact, that clouds his entire purchase.”

Research shows that many agents will have these types of situations on their hands with clients. In a national survey of 2,000 home buyers conducted by HSH.com, 80 percent say they regret at least one thing about their home. The most common regrets included inadequate closet space, too few bathrooms, undesirable neighbors, and subpar schools. In a separate Redfin study of 2,000 buyers, one in four say they wouldn’t buy their home again if given the chance.

Duffy says she wants her buyers to have peace of mind about their purchase long into the future. Here are four ways she accomplishes this.

Educate, Educate, Educate

“If only I knew …” are words you never want to hear your client say after buying a home. Duffy makes sure that from the start, her clients are educated on every step of the buying process. First, she talks with them about the financial aspects, providing clients with a matrix to use when comparing loans from lenders. She also carefully reviews what purchase and seller agreements are with clients during the first meeting.

“It’s important to make buyers smart about the process,” Duffy says. “There’s empowerment in learning about what will likely be the largest purchase they’ll ever make. They’ll gain the knowledge so they feel smart and confident about their decision.”

Organize and Scrutinize Listings

Have your clients jot down the address and neighborhood of each home you visit together. Then create categories such as price, location, property condition, curb appeal, and other items, as well as a list of amenities. Your clients should fill out each category and check off amenities during or after every home tour.

Then have them rate each home on a scale of one to 10 (with 10 being the best). Duffy’s philosophy is if a home rates below seven, the property is no longer a contender. If it rates at seven or higher, buyers should move on to vetting the home’s history and neighborhood.

Get the Neighbors’ Perspective

Talking to the neighbors is one of the most important steps in avoiding buyer’s remorse, Duffy says. They can provide insights into the neighborhood’s characteristics, such as whether there are noisy or rude neighbors, high crime rates, or low-quality schools. (Remember, when it comes to safety and schools, you can’t say much because of fair housing restrictions.)

“People move to neighborhoods because of perceived lifestyles,” Duffy says. “They believe they’ll hang out with their neighbors and share coffee or sugar. But too many buyers don’t do their homework to check out that lifestyle before they move into a house.” The neighbors themselves can be a deciding factor for a buyer, too, such as if they have kids the same age, Duffy adds.

She gives her clients a list of seven questions to ask neighbors:

  • What is the homeowner association like (if there is one)?
  • Is there crime in the area?
  • Is there construction in the neighborhood?
  • Do you know why the seller is moving?
  • Have you seen any repair trucks at the home?
  • Are there any reasons you wouldn’t buy this house?
  • Are the schools good?

Duffy accompanies her clients when they ask neighbors these questions because the experience can be helpful for agents, too. Some neighbors have been so impressed with the initiative Duffy takes for her clients that they’ve called on her for their own real estate needs, she says.

Do a ‘Background Check’ on the Home

In a 2013 Trulia survey of 2,100 home owners, 22 percent said they regretted not getting more information about their home before they purchased. Duffy urges going beyond seller disclosure forms. Have your clients check the national database of sex offenders to see if any live nearby.

Also, get a C.L.U.E Personal Property report (or Comprehensive Loss Underwriting Exchange) to view past insurance claims on the property. The report lists the dates, loss types, and amounts paid for any claims over the last five to seven years. It also tells if a claim was denied.

“Buyer’s remorse can cause a lot of anxiety,” Duffy says. “I never want a buyer to believe they should not have bought their house. We as agents need to do everything possible to make sure our buyer walks into closing excited, knowing with certainty that they’re buying the right house at the right price. That’s how you can build a client for life.”

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