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When a sale dies of remorse; Anxieties: If the homebuyer allows them to fester, the deal may never close.

THE BALTIMORE SUN

If you have ever bought a home, you may know the feeling.

Your contract has been accepted and a feeling of excitement fills your being. But as the day wears on and the realization that you've just undertaken a major financial commitment settles in, the joy can be replaced by anxiety.

Was it the right house?

Did we pay too much?

Should we have looked at more houses?

Can we really afford the payments?

What have we just done?

The feeling is called buyer's remorse. And it's a normal process that many people go through when purchasing a home. But sometimes the feeling doesn't go away, and the buyer decides that getting out of the contract is the only solution.

For Marshall and Peggy Duer, that anxiety came only hours after they submitted a contract for a house last summer. After six months of fruitless searching, the Duers finally found a home in the Timonium/Cockeysville area -- a rancher that needed a lot of work to bring it up to date.

It wasn't perfect, but the Duers decided to go ahead and submit a contract.

"I woke up in the middle of the night and told my husband, 'We can't do this,'" said Peggy Duer. "It was within a 24-hour period that we knew we had made a mistake. It wasn't just the work that needed to be done, it was the wrong house."

Luckily for the Duers, the contract had yet to be submitted to the sellers for approval and they were able to dissolve it and retrieve their down payment.

Their agent says buyer's remorse has become more common in today's hot real estate market.

"It has been happening a lot lately. The market here in Towson is so tight and so competitive right now," said Ashley Richardson, an agent in the Towson south office of O'Conor, Piper & Flynn ERA. "In this type of market, people have to make a decision so quickly that sometimes they have second thoughts. And when it does happen, it is almost always when there are multiple listings."

The house the Duers put the contract on had been on the market for only a short time. When they went to see it, another interested couple was also looking at it.

"The other couple stayed the same amount of time we did and I got this feeling that if we wanted this house, we would have to go for it now. That was the big pressure. Houses were being bought the first day they went on the market," said Duer.

The Duers found another house in the fall and have since settled on it and moved in.

"We don't have any regrets," Duer said. "I think that if you are looking for a specific style house or area, it just might take a little longer. So while you don't have to wait for the perfect house, don't settle for something you don't want."

Because the Duers knew immediately that they had made a mistake and were able to withdraw their contract before it was accepted by the seller, no harm was done.

Such isn't always the case, however. And buyers should know that a contract is a legally binding document, says Mary Antoun, the executive vice president and chief executive officer for the Maryland Association of Realtors.

Many times a buyer will only lose the initial down payment, or earnest money, but it can go beyond that.

"The Realtors I've talked to said buyer's remorse is extremely common, but it usually is that the buyer needs some kind of reassurance that what they've done is the right thing to do. And it usually doesn't go beyond that," Antoun said.

"But once you have a contract signed and there is earnest money, the contract determines what the terms are. A binding contract is a binding contract. It's a huge commitment for the seller as well as for the buyer. If something can't be worked out, then it becomes a legal issue and the terms of the contract govern."

That is also why in Maryland and many other states, it is advisable for buyers and sellers to get legal counsel if they don't understand the terms of the contract or if they need assistance to get through the real estate process.

"There are contract terms that must be met by each party, and if those terms are not met, then the contract can be undone," said Antoun. "Short of that, it would depend on how willing the seller is to release it."

Larry Caplan, a Towson lawyer who focuses much of his business on the real estate industry, couldn't agree more.

"The best advice is to consult an attorney before signing the contract. I can't tell you how many times I've told people that have called me with this problem that they are making the call too late," said Caplan.

"Buyers should understand that the contract is a binding document and that all of the terms of the deal are in the contract. Far too often, buyers enter into the purchase without realizing the importance of the contract."

It is not uncommon to feel buyer's remorse on some level, say real estate agents, but it's something that is usually just a natural response to a sometimes stressful situation.

"I was trained to advise buyers that they are going to feel buyer's remorse. Pretty much anyone who has ever bought a house feels that way," said Patricia Savani, vice president of Champion Realty.

"On the Richter scale of stress, it's death, marriage, birth and buying a house. And sometimes you have people that get buyer's remorse and they can get themselves so emotionally charged that all sense of reason is gone. The difficulty there is that the law says, even if you fall out of love, you're contractually obligated. And even if you find a loophole and have an out, once the money is deposited in an escrow account, the broker has no control over it."

When a contract is actually broken, Savani said, it sometimes has to do with reasons other than buyer's remorse.

"Many times when people want out, it is not buyer's remorse. Instead, there is new information on the table. Maybe the home inspection unearthed something that they are not comfortable with or there's a radon problem that can't be negotiated," said Savani.

"Buyer's remorse can usually be handled early on by an experienced agent that tells them every human that has ever bought a house feels the emotional charge and fear of a decision made. And that they are in good company."

Marc Witman, an associate broker in the Greenspring office of Long and Foster Real Estate Inc. and past president of the Greater Baltimore Board of Realtors, agrees that it is up to the agent to prepare the buyer.

"Buyers should work with agents whose priority is to have a satisfied customer at the end of the transaction. In the current market, we are in a shortage of inventory and buyers do feel some pressure when they see there are not a lot of homes that meet their needs and desires," said Witman. "It's a very delicate balancing act. It's important to keep focused that the most important people in the transaction are the buyers and if they need to step back, don't push them."

But if the buyer does begin to feel remorse over the decision made, a little reassurance goes a long way, said Steve Campbell of Steve Campbell Realty Co. "I deal with a lot of first-time homebuyers, but usually they just need some reassurance. You go over the tax benefits of owning a home, that they are contractually obligated to go through with it and that it's a good deal. I also let them know that I will be there after settlement."

The decision to let a buyer out of a contract is usually the decision of the seller as stipulated in the contract. Or in the case of a new home, the builder sometimes has to make that decision. Many times they will try to work out a compromise before withholding a deposit or taking anyone to court to uphold the contract.

"In our company if a customer decides to change his or her mind and we haven't started the house, or we are not out of pocket, then we certainly give the deposit back. We're not in the business to make money off of forfeited deposits," said Jay Weiss, a partner in Ashley Custom Homes in Pikesville and president of the Home Builders Association of Maryland. "But most people don't make a rash decision when they look at a new home because they have had to decide on the site and look at a model and even pick specific colors. So there's time that goes by."

However, if there is a vested interest in the property by the builder, if special plans have been designed or construction has started, it may become more of an issue.

"Then we are a bit more concerned. But it's still a public relations thing. We will bend over backwards to help people out. If they thought they had a problem they couldn't overcome, then we would help them through it," Weiss said.

Almost always the decision is founded on an individualized basis, said Anne Madison, vice president of communications for Ryland Homes. "We do have a general policy, as most builders do, that unless there is a circumstance related to mortgage approval or contingencies, then the earnest money is exactly what it is, earnest money to go through with the contract," said Madison. "So what would be lost is that initial deposit. But I do have to emphasize that we do look at every individual circumstance and try to work with the buyers on their individual situation."

The best way to avoid problems is to be as prepared as possible going into the home buying process, advises the American Homeowners Association and the United Homeowners Association, two independent consumer-oriented groups.

"The principal issue in a hot real estate market is, when people get turned down or lose out on homes that they think they are qualified to buy, they can tend to feel a little desperate. And they feel that if they don't buy then they will get closed out of the market," said Richard J. Roll, president of the American Homeowners Association. "And that's really a mistake. Additional homes come on the market all the time. And one of the most important things you can do is prepare in advance to buy a home and to not find yourself in a position where you have too much pressure."

Roll says some of the biggest mistakes homebuyers make that can lead to buyer's remorse is proceeding without a plan; buying on emotion, not value; not asking enough questions; and stretching their loan qualification limits to buy a home out of their budget.

Jordan Clark, president of the United Homeowners Association, also advises to know what the contract is and know what options are available.

"If you have a lot of reservations, then don't sign a contract and don't put any money down. Or resolve your reservations before you put your name on a contract," said Clark. "But in order to do that, you have to be willing to walk away from a deal. The No. 1 thing is to know what the contract is. Know what you are signing and what your options are."

Experiencing remorse

When buyer's remorse occurs, it usually can be cured by an experienced real estate agent who can relieve the anxiety associated with a stressful sale.

But for those buyers who want to opt out of a ratified contract, there can be serious consequences, including:

Losing deposit or earnest money.

Being sued for monetary damages by the seller for breach of contract. Those damages are defined as what would put the seller in the position he would have been in if there were no breach of contract. One way to measure the damages would be if the buyer signed a contract for $200,000 and then reneges. The seller puts the house back on the market but can only sell for $175,000. The seller could then sue for the loss of $25,000.

Being sued by the seller for specific performance and ordering you to complete the process.

Being sued by both real estate agents for the loss of commission on the sale.

Impeding the process of buying another home if you don't know what your total liability potentially will be from walking away from the first contract.

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