Apr 17, 2019 by - Hana LaRock

Your Client Wants to Back Out at the Last Minute – What Can You Do?

You work very hard to bring new clients to your business. Whether they are buying or selling a home, looking for an investment opportunity, or in the market to buy something commercial, you’ve done your part to create a successful rapport with the client. They like you, you like them, and so far, everything has been going well. It’s even gotten to the point where your client is ready to make a decision on a property. Perhaps they’ve even given you the go-ahead.

But, then, all of a sudden, they back out of the deal. What do you do? You were not only counting on your closing cost commission, but you were also really excited about helping this client.

Believe it or not, it’s not the first time nor the last time a client will change their mind so late in the game. That being said, it never gets easier each time it happens. And, even if it’s never happened to you, it’s good to have some strategies that can help you cope in case it does.

Reasons People Back Out

There are many reasons why people would back out of a deal, as hard as those reasons are to believe. It’s like when someone gets cold feet on their wedding day. It seems unheard of — that it only happens in movies, or that if it does happen, it’s easy to convince the hesitant person to get back in there. Similarly, there are cases in which people are adamant about their decision of changing their mind on buying that house, and it can be extremely hard to convince them otherwise.

One of the biggest reasons people back out is for circumstances out of your control and their own control. For instance, maybe they lost their job, or a parent got sick, and they can no longer pay for their mortgage. Perhaps they suddenly got a job offer in another city that they cannot resist, or maybe a spouse or child needs medical treatment in another state. Buying a home is a long process, and a lot can happen in that time that most people would never anticipate.

But, people also back out for reasons that while may be out of their control, are not necessarily deal breakers. Unfortunately, one of the most common reasons that people back out of a deal is because they find out that there is a registered sex offender living in their new neighborhood. Or, something catches their eye that makes them feel uneasy. Maybe, there was a crime that happened nearby, etc.

The Consequences of Changing Your Mind

As an agent, you’re probably very aware of what can happen if a client backs out of a deal. However, they are probably not so aware of the consequences themselves. By informing them of the problems they may face if they back out, you can help save both you and them a lot of time and worry. And, in case you need a refresher on what these consequences are, here are just a few of them:

  • They might lose their down payment
  • They may have to pay the difference in the final closing amount. For instance, if the seller was going to get $300,000 from this buyer but they backed out, and the new buyer closed at $250,000, there’s a chance that the client who backed out has to pay the remainder.
  • Other legal repercussions, for instance, they could be sued by the seller. 
  • They may still have to pay real estate broker commissions (obviously, not a problem for you, but it is an unnecessary stressor to try to get this kind of money out of them).

What You Can Do

Of course, a lot of these consequences will only take effect if your buyer backed out after already making an agreement with the seller. And, while it’s not your responsibility to reel a person back in, you may be the only one that has that capability. So, if your client is considering backing out due to one of the reasons that’s not necessarily life-changing, here are a few things you can do:

Disclose everything

If you don’t want to risk your client backing out, then the best thing you can do is disclose as much as you can about a house or neighborhood, this way, there are no surprises. If they ask questions that you cannot answer, refer them to where they can go to get an answer. 

Talk out your client’s concerns

If your client wants to back out of a deal because they discovered that a sex offender lives on the same street, you can sit down and talk to them about this. Their concerns are very real and should be validated. However, it’s important to explain that the law has issues, and not everyone registered as a sex offender is actually an offender — perhaps, they got caught relieving themselves outside. Encourage them to talk to other neighbors in the area to see how they feel about it.

If they are really hesitant, explain that because of the problems with the law, there are sex offenders registered in nearly every area neighborhood or town in the United States. Have them look up their own home town on the registration website, to see if an offender pops up within a few miles’ radius. Chances are, someone will pop up, and chances are, your client never noticed. This might help to change their mind.

Put yourself in your client’s shoes

But, what if something else happened? A robbery in their new neighborhood? A crime that put them on edge? A news report that the local power plant is poisoning the residents? Remember that the seller and agent are obligated to disclose anything like this. But, it’s impossible to know everything. Depending on the circumstances, the client may very well be in their rights to back out if they so choose.

Ask yourself how you would feel if you were them. If you wouldn’t take the house, then they shouldn’t feel obliged to, either. But, if you would, and you think their concerns are not necessarily big enough to call off the deal, refer them to resources that can help ease their worries. And, encourage them to discuss the decision with friends and family before backing out.

Remind them of the consequences

If you’ve made the determination that the law won’t be on the client’s side if they decide to back out of the deal, then the only thing left to do is remind them of the consequences that they will face if they don’t move forward with the deal. What it would involve, what they’d be required to pay, etc. Many times, they will realize that their concerns (again, which are completely validated), are much more preferable to calling the deal off altogether.

Have you ever had a client back out of a deal or who wanted to back of a deal? What happened? How did you handle it? Let us know in the comments below!


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