Recently, a reporter asked me if I’d ever run into buyers who appeared ready to purchase but then changed their minds. “A few times,” I told her.
“But why did they change their minds?” she asked. “Was it the house? Was it price? Was it emotion?”
I thought about it for a couple of minutes, and then told her about two young couples I had worked with whose stories – at first – did not work out as planned.
“It was financial for one, and emotional for the other. But sometimes the emotion is not just on the part of the buyer. Sellers have emotions, too.”
Couple Number 1 – Financial
Richard and Maria called me about purchasing a house in Boca Raton. Before we had gone too far in our discussion I asked them the first question I ask of all potential buyers:” Have you been pre-approved for a mortgage?’
Because they had not, I asked them to talk to the mortgage broker I work with. He called me and said their credit was excellent and that they were pre-approved up to $350,000.
Then I met with Richard and Maria and discussed their needs: a minimum of 3 bedrooms, 4 if possible, and at least 2 and a half baths. And a 2 car garage. Of yes, and a pool, if possible.
We searched through a couple of dozen homes. They fell hard for two of them. One was a two storey home in Boca Chase, a west Boca Raton subdivision. The other was a one storey in Mission Bay, also in West Boca.
They decided they needed the weekend to come to a conclusion about which home would best suit them. This was back in 2012 when we had ample inventory, so these buyers had time to ponder before making a decision.
Know your down payment costs and your closing costs
The pre-approval was for an FHA loan, so they knew they’d have to put down a minimum of 3.5%. They also knew that closing costs, which typically include bank charges, title fees, house taxes, and home owner association charges, would run them around 4%.
Monday morning arrived and so did their decision. They went with the one storey and we wrote up the contract. The sellers counter-offered, which was expected, and we agreed on a price of $339,000, well within their range.
The next step was to schedule the inspection. On Friday of that week we went in, the inspectors pronounced the house in excellent condition, and the buyers were excited.
They asked to go back in two days later so they could measure the rooms to see if their furniture would fit. And that’s where we ran into trouble.
Consider the additional costs of purchase and ownership
As we were walking through the house, Maria asked Richard about moving costs. It seems that in their eagerness to buy their first home, they had not discussed this aspect. Then, they started to talk about the extra furniture they would need. At the moment, they lived in a 2 bedroom condo of just under 1200 square feet. This house was more than double that size.
While they toured the house, measuring and planning, Richard noted that the appliances, though in working condition, were more than 15 years old. “We’re going to need to replace all of these,” he said.
As they continued their discussion, I noticed that their enthusiasm was rapidly waning. “Problems?” I asked. I already knew the answer and she confirmed it.
“I can’t believe we didn’t think about moving expenses. And the other stuff.”
They realized they had not done sufficient budgeting to cover the costs of moving the furniture they owned, the cost of purchasing new furniture, and the cost of the new appliances they felt the houses would need.
While they were emotionally ready to move, they were not financially prepared. They figured a year or two would give them enough time. I suggested they also think about repair costs that might occur, such as the necessity for a new air conditioner or minor roof repair.
The happy ending for couple number 1.
We stayed in touch and just about a year later, I found a home that I knew would be ideal for them. During the past year, they had made it a point to save several thousand dollars because of the lessons they had learned.
So this time around, the couple was financially prepared for moving expenses and for buying new furniture. Maria said to me, “Because you mentioned it last time out, we also budgeted for repairs,” (It’s nice to know that some people take our advice). They also got a small bonus out of the deal: because this house had just been redone, they were able to save the cost of new appliances.
Couple number 2 – Emotional
This story is dramatically different from that of couple number 1 because the problem that confronted us was entirely emotional in nature.
Darius and Sonya were cash buyers. They both have high paying jobs. She’s an MD running a general practice and he’s a physical therapist. They have two children, both in middle school, and they wanted to stay in the Boca Raton school district.
They’d been renting in Boca for the last three years and knew they were ready to move into a home of their own. They were looking for a home that would give them at least 4 bedrooms, a pool, and 3500 or more square feet.
We looked at five homes and they picked one out that same day in a gated west Boca community called Boca Falls. On the day we saw the house, the owners were at home. The owners made pleasant chit-chat with Darius and Sonya.
Selling? Leave space for buyers to imagine where their possessions will go.
One thing we noted was that there were numerous family photos adorning most of the walls in the house. There was almost no wall space that was not covered with them.
(Just a note: if you’re selling, take down your family photos and leave space on the walls. You want the potential buyers to have room to imagine their own photos on the walls).
Sonya, ever tactful, said to the owners, “I love the pictures of your children. It looks like you’ve cataloged them year by year.”
Mrs. Owner smiled sadly. “I watched them all grow up here and then move away. I miss them every day. But I love looking at them.”
Don’t tell buyers that you’re anxious to sell
Mr. Owner said they were planning to move to a 2 bedroom condo in a 55+ community in Delray Beach. He said they were having a tough time maintaining the house and really needed to downsize, since it was just the two of them in the house.
We said our goodbyes and I told the owners that we’d be submitting an offer for the house later on.
They thanked us for coming and said they’d look forward to receiving the contract from their agent.
Darius and Sonya were so excited they were almost jumping up and down. They’d found a great house quickly and easily. Since they were cash buyers with no contingencies to hold up their sale, they were already calling the mover.
They thought the house was worth the asking price. But, since the seller indicated that they were eager to sell, my buyers decided to offer a bit less. So we sat down and prepared the contract and I emailed it to the listing agent.
Negotiating price is always worth a try. Even if it’s just a little.
My people offered $15,000 less than list, which was just 2% under the asking price of $750,000. It wasn’t much to ask, but no one wants to pay full price.
The listing agent called back and said the owners had agreed.
Then we waited for the signed offer to come back. And we waited. And we waited some more. The buyers were getting anxious.
Two days later we still had not received a reply. Because 48 hours is the time period we had stipulated for a reply, I called the listing agent to ask what was going on.
He said he didn’t know because he had not heard from the owners, despite numerous phone calls. He promised me he’d go in person to check on the status of the contract.
I called the buyers to update them and said I’d keep them posted on progress. Two hours later the distraught listing agent called and said the owners had decided to take their home off the market.
Not often, but sometimes sellers change their minds.
Naturally, I asked him why. “They said they’re just not ready to move to a place where there’s no room to see all of the family pictures.”
This time, it was the sellers who killed the sale. Their emotions got in the way. I had run into this type of circumstance once before when I was the listing agent. However, I was able to find the source of the seller’s worry and eliminate it.
In this case, I did not have a direct connection to the seller. There was nothing I could do except deliver the bad news to the buyers and hope we could move on from here.
Fortunately for me, Darius and Sonya didn’t hold the seller’s lack of cooperation against me. Two weeks later we looked at another five homes in the neighborhood and they picked out one they liked. That sale went through with no difficulties at all.
Buying? Know your finances. Selling? Know your feelings.
So, if you’re thinking about buying a home, make sure you have an idea of all of the expenses that go with purchasing and maintaining a home of your own.
If you’re a seller, make sure you’re really ready to leave that special place that has been your home for so many years.
And then, please call and let us help you to purchase a new home or sell your present home.
New Harbor Realty