Dealing with Sellers Remorse
Just like buyers who get cold feet, sellers remorse can happen to sellers, giving sellers second thoughts about selling a home. Sellers remorse often happens because the seller was not really motivated in the first place. Sometimes sellers think they want to sell, but they don't really have good reasons to sell. You would be amazed at how little thought can go into the process of deciding to sell.
Sellers Remorse Defined
Sometimes sellers want to "test" the market, to see how much a buyer will offer, to figure out if a home is priced right. That is a wasted effort and pointless. The first question many agents ask is why is the seller selling? How much a seller wants is not really paramount to the situation unless the high amount the seller hopes to receive is hopelessly out of the question.
A downside can exist for agents who work with non-motivated sellers. Real estate agents spend money to advertise and market. Agents receive no return on that investment and earn no money when sellers are not serious about selling.
Sellers remorse means the seller has decided it was a mistake to list a home for sale and no longer has a desire to sell. A seller of a Victorian fourplex in Sacramento decided to put his home on the market because he felt the market was declining. He thought if he waited a few more years, the value would fall so low that he would lose his opportunity to make a reasonable profit.
After his Realtor brought him an offer, he panicked. He came to the conclusion at midnight that he could not part with his home of 16 years at any price. Suddenly, the reality of the situation hit him. It was all fun and games when buyers came through to tour. But when the time came to sign on the dotted line, the seller froze. It's a common reaction when a seller is not truly motivated.
How to Prevent Sellers Remorse
Owners can prevent sellers remorse by thinking through the entire process and having a plan -- a relocation goal -- including strong reasons for selling.
- A real estate agent can help a seller plan for the future and walk the seller through options. Discuss wants and needs with your agent.
- Draw up a Ben Franklin list, sorted by benefits on one side and drawbacks on the other side to selling. If the benefits outweigh the drawbacks, then you should sell. If the drawbacks exceed the benefits, don't put your home on the market.
- If a seller is worried about not being able to find a suitable replacement home, the seller can sell on a contingent contract. Contingent contracts give the seller a period of time to locate another home without an obligation actually close escrow with the buyer if that replacement home is not found.
How a Seller Can Cancel a Listing
First let's look at some of the facts of a listing and how they work. Not every agent will let a seller cancel, so that might be a detail to discuss before signing a listing.
- A listing agreement is a binding contract between the seller and the real estate broker. Not every listing agent nowadays binds the seller to sell the home if the seller changes his or her mind. In my personal business, I will cancel a listing for any reason just to keep my clients happy.
- Exclusive right-to-sell listings are the most common and entitle the broker to a commission if a ready, willing and able buyer makes a full-price purchase offer.
- Sellers who develop sellers remorse can cancel the listing but may end up owing the broker a commission if the broker performed. This rarely happens in California anymore because the listing agreements have become more lenient.
- Do not sign a six-month listing agreement if the agent will not agree to cancel the agreement at your request. Ask about the length of the listing and if you can shorten the term.
- Many real estate agents enjoy a good reputation in the community and would be willing to cancel a listing, but you should ask about it before you sign a listing. It may take time to cancel a listing as well because only a real estate broker or manager can cancel a listing. The listing does not belong to the real estate agent.
- Before you fire your agent, talk to the agent, the agent's broker and, perhaps, your real estate lawyer. Somewhere along the line, you should be able to work out a compromise agreeable to everybody.
What Happens if Sellers Remorse Pops Up at Closing
Little is more discouraging for all parties involved to slug it out through the home inspection and get all the way to closing only to discover the seller is a no-show.
- Although there have been a few court cases that have ruled against the seller, generally the court will not make a seller sell.
- However, buyers often retain the right to pursue damages and sue the seller.
- Moreover, the brokers will have likely earned a commission and be entitled to demand that payment.
At the time of writing, Elizabeth Weintraub, CalBRE #00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.