With Terry Story, 26-year veteran Real Estate Agent with Coldwell Banker in Boca Raton, FL
As a longtime real estate agent, Terry Story has encountered many complications along the way from the first showing to the handing over of the keys. It has happened, she says, that just before the deal is inked, the seller is gripped with buyer’s remorse and backs out. Where’s the recourse for the buyer?
Unfortunately, sometimes the only answer lies with the courts, but suing can be expensive, time-consuming, and often not rewarding for the buyer. Terry’s advice is to simply turn away and begin a new home search, as heartbreaking as that may be.
As part of Terry’s Real Estate Survival Guide, she encourages buyers to comply with a code of house-seeking etiquette. Realizing that the owners have staged their homes so they show in the best possible way and then have to vacate for the duration of the prospective buyer’s visit, buyers should always show respect and restraint toward another person’s property. Don’t come with an army of friends and relatives, don’t allow children to run helter-skelter through the rooms, don’t move objects around, and don’t leave fingerprints on windows. The homeowner may be recording your visit on a hidden camera, and so your performance could derail or negatively influence the buyer’s desire to purchase that home.
Terry tells all buyers to pretend they’re walking into the White House and to act accordingly.
Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital. Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.
Steve Pomeranz: It’s time for Real Estate Roundup. This is the time every single week we get together with noted real estate agent, Terry Story. Terry is a 26-year veteran with Coldwell Banker located in Boca Raton, Florida. Welcome back to the show, Terry.
Terry Story: Thanks for having me, Steve.
Steve Pomeranz: Well, you know I always like for us to do our Real Estate Survival Guide, and this is the time in the show that we try to put in every single week where there’s a problem that springs up or a tip that you can give to our listeners about real estate. What is it this week?
Terry Story: Well, this week it’s about buyer’s remorse and buyers wanting to get out of contracts, and they have so many outs through their inspection clause, through their mortgage, but what happens when a seller gets seller’s remorse and they want to back out of a contract?
Steve Pomeranz: What happens?
Terry Story: Basically, it’s this. Sellers, sometimes it happens, not very often, where they want to get out of the deal. You, as a buyer, don’t want that to happen, so the only way you’re going to be able to realistically deal with this in a practical sense is you’re going to have to sue them. What are you suing them for? Specific performance.
Steve Pomeranz: Before you go on, let me read the actual question because I think it’s a well-written question: “We found a house and entered into a contract to buy it. We did our inspections, got our mortgage loans set up, and are ready for the closing about three weeks from now. Last night, the seller called and told us that she had an unexpected issue and will not be able to sell us the house. Don’t we have rights here? Do we have to wait until the closing date comes and goes before we can start taking action to enforce the contract?”
That is the situation. You’ve put all this effort and time and your heart into buying this new home and seller pulls out at the very last minute. You feel like, “Heck, I deserve some redress here.”
Terry Story: Yes. The first thing you have to do is hire an attorney. That’s the absolute first thing you need to do, and there are some provisions to try to prevent this from happening, and one of them, Steve, you know the commission…if a realtor is involved and there’s commission being paid on the transaction, that commission is still due if the seller decides to back out. Now, why do they do that? There’s a secondary reason. Obviously, people would think, “Well, it’s because realtors want to make the money,” but it’s also to keep the seller in the contract. They’ve got to think twice, like, “Wow, I still owe this huge amount of money whether or not I sell the house.” That’s kind of built in there to prevent them from wanting to go down that route.
Steve Pomeranz: So, it has to be pretty serious for some seller to decide, “Hey, I’m going to be paying the sales commission anyway, but I’m going to cancel the transaction.”
Terry Story: Right. In a practical sense, if you were a buyer, the best thing that you can do is have a letter written, try to encourage them to continue with the contract, threaten to sue. You’re going to have to sue for specific performance. It’s an expensive route way to go. It can take many, many months to go through the court systems. Think about it. Is it really worth it? Is there another house that’s similar that you can buy? Because you’re going to be tied up in this. I’ve gone through this personally in a transaction, and at the end of the rainbow, the judge sided with the seller in saying that, “We’re not going to force a family to move out of their house.”
Steve Pomeranz: I guess that’s the bottom line.
Terry Story: Think twice before you go down that route.
Steve Pomeranz: I’m talking with Terry Story. This is our Real Estate Roundup segment where we get to talk about everything real estate, and Terry,of course, is a real estate agent herself doing business in Boca Raton, Florida, which is in my backyard, as well. Your latest is this question: “How much of a down payment do you actually need?” What do you mean by that?
Terry Story: They did the survey to ask people, “How much money do you think it takes to put down on a house in order to buy it?” Over 50% of the respondents thought you needed 20% down, and, basically, we need to get the word out there, that’s totally not the case. Today, you can actually get mortgages still as low as 5%. These are conforming conventional mortgages, and, as a matter of fact, what a lot of people might not realize, since 2010, the number of people putting down less than 10% has grown threefold. For some people, this is a strategy. If you think about it, Steve, if you put a lot of money down and you think you’re building this equity in the house, when the market drops over 50%, it puts you upside down. By people putting less money into it, they feel like they’re taking less risk when buying a property.
Steve Pomeranz: Yes, I see that, but I also think that this idea of 20% comes from all of the news related announcements that took place during the deep heart of the real estate crisis because, at that time, it was very hard to get a mortgage, so a lot of cash buyers were coming in and that those that could qualify for a mortgage, the banks were asking for a bigger downstroke.
Terry Story: That’s right. For condominiums, for example, you need 25% to 30% down to buy one.
Steve Pomeranz: Yes, but things are loosened up, so it’s important for us to get that news out there. It’s interesting. I spoke with an individual last week who came to see me and he worked as a paralegal. Six years ago or so, he said he could not get a job, and he had not really pursued anything. He kind of dropped out of the job force. I said, “Go back out there because there are jobs now. What was going on five or six years ago has definitely changed today. You have to stay on top of it.” It’s the same lesson here with regards to real estate that what you may have heard or you may take as gospel that happened three, four, five years ago in effect has really changed. As a matter of fact, when it comes to the credit needed or the credit requirements for borrowers, banks are even lowering the credit scores they need.
Terry Story: That’s right. It’s constantly evolving. It’s almost like you have to check in every month.
Steve Pomeranz: Well, that’s why we have you, Terry.
Terry Story: That’s right.
Steve Pomeranz: All right, Terry, let’s switch gears. This one was pretty funny to me, and actually, I got a really big kick out of reading it: “Buyers can irk sellers. Here’s how.” There’s a normal tension, of course, between a buyer and a seller and the feeling maybe that the buyers are pushing too hard or something, but you’ve encapsulated this in your Real Estate Survival Guide, so tell us about it.
Terry Story: Oh, gosh. I see it on a daily base. Here’s the first thing: disrespectful house visitors. I just lived through this. I lost a deal, and the root of the problem was the disrespectful house visitors. Whatever you do, don’t bring an army of people to look at a house. There’s no reason why the grandparents, the aunts, the uncles, the whole entire family have to go look at the house for the couple that are actually home purchasing. I understand you want other people’s opinions, but sometimes it can be taken to an extreme.
In this particular case, I was personally involved in, kids were jumping on the bed, using the restrooms, fingerprints on the sliders, staying in the house for well over an hour, inviting friends to come over to take a look at it. This is an occupied home. You have to be respectful to those that live in the house. Keep in mind that sellers are generally, in many cases, just driving around in circles in the neighborhood while the showing is going on. This is the first thing you can do to really tick off the house that you’re trying to buy.
Steve Pomeranz: Yes. If you think about it, the seller is wisely vacating the premises while you’re there because you don’t want them hovering over you as a buyer, and what are they doing with themselves? They want to get back in the house as soon as they can. This is kind of an inconvenience, even though they’re doing it for their own reasons, so they may be circling the neighborhood or whatever. They may be waiting for you to come back. Meanwhile, you’ve got half the family in there, your kids are jumping around.
Terry Story: Yes. It’s just totally disrespectful. It’s not your home. It’s somebody else’s home, and the other thing a lot of people don’t realize, and I know this for a fact, many times sellers have microphones and cameras in the house. You’ve got to be very careful of what you say and what you do because it’s going to come back to bite you, especially if you like the house and you want to try to buy it from them.
Steve Pomeranz: What a great idea, because you’re wondering what they were saying.
Terry Story: I know. I always try to be very careful as to what I say in a house.
Steve Pomeranz: Well, there was a quote in this Real Estate Survival Guide that said, this agent said, “I tell all buyers, ‘Let’s just pretend we’re walking into the White House.’” I don’t think you’re going to have your kids jumping all over the White House furniture.
Terry Story: No, security will tackle you.
Steve Pomeranz: Exactly. All right, this is our Real Estate Roundup with Terry Story. Terry is with us every single week to discuss real estate, all the aspects of real estate, and you can find more about Terry at TerryStory.com. Thanks, Terry.
Terry Story: Thanks for having me, Steve.