Avoid Buyer’s Remorse and Legal Actions Taken Because of It

Let’s face it, the real estate market has changed. The pandemic purchase push is over. Similarly, the days of getting dozens of offers in the first hour of your listing going active are no more. Just as our parents told us growing up, the only thing constant in life is that there will be change.

In many ways, the dust finally settling from the pandemic real estate market frenzy is a welcomed change for buyers. With homes not flying off the shelves like before, buyers have a chance now to do a meaningful level of due diligence before submitting an offer.

One of the most common byproducts of the changing market that we are seeing in the legal profession is buyer’s remorse.

Once the closing has been finalized and the buyer is sitting in their new living room watching “Wheel of Fortune,” the last thing that you want them to be thinking about is something that was missed or that could have been handled better during the transaction.

Many instances of buyer’s remorse involve claims against real estate professionals and their broker/brokers related to some form of miscommunication leading to an alleged failure to meet client expectations, against home inspectors for missing something significant during the inspection process, and against sellers for the failure to disclose known items that materially affect the value of the property, which are not readily observable or known to the buyer.

Here are some useful strategies for avoiding being caught in the crossfire of claims made by buyers:

1. It’s all about communication.

Just as the perceived value of a house is affected by “Location, Location, Location,” you need to protect yourself during a deal using clear and concise “Communication, Communication, Communication.” With texting, emails and phone calls, it is important to summarize conversations that incorporate multiple communication mediums. For instance, if you talk on the phone about something with a buyer, then get a text message from that buyer adding something that they forgot to mention earlier, it is a smart business practice to send them a confirmation email when you get back to the office that brings together all important points into one spot.

Also, ask your buyer at the end of your email to please confirm receipt as soon as possible. Remember, memories fade over time, and buyer’s remorse can often lead to buyer’s amnesia. Even though it takes a little extra time, you will be extremely thankful down the road to have those “CYA” emails to send in response to a client with buyer’s remorse.

2. Go over the seller’s disclosure.

Before you forward the seller’s disclosure to your buyer, go over it with the listing agent and make sure that all questions have been answered. If things are checked that should be investigated further, make sure to email the list of those items to the buyer, and let them know that you will be informing the home inspector that those items will need to be addressed in the home inspection report.

For homes being sold by investors who state that they never lived in the home and have no knowledge of any issues, it is worth asking for the seller’s disclosure that the investors were given prior to their purchase. If an individual or company has knowledge of an issue, they have a duty to disclose regardless of whether they lived in the home.

Sometimes the emails of a seller denying that they have additional documentation to provide to your buyer can also be useful evidence down the road to protect you during potential litigation. It is proof that you inquired as part of the due diligence process.

3. Summarize the home inspection report.

It is a good idea to summarize the areas of concern that you identified in the report with an email to your buyer. This is especially true when a home inspection recommends that your buyer have an additional inspection of the pool or the foundation. Make sure that you have documentation of the communication where you pointed out the need for an additional inspection to your buyer.

Keep in mind that your client’s response is just as important as your email. If you email your buyer that you recommend hiring a pool inspector based on the home inspection report findings, make sure to get a written response back. If your buyer calls you back to discuss the additional inspection, make sure to summarize that verbal communication in an email to the buyer.

You want to avoid a situation down the road where your buyer denies either receiving the email or having the telephone conversation after the fact.

4. Walk the property.

Make sure to walk the entire property (especially large lots and acreage) with the buyer to identify any potential issues where a neighbor is using a portion of the real estate for ingress/egress purposes. Furthermore, make sure that you don’t have a situation where a neighbor has left a mobile home or some other personal property on the land for an extended period. You never know when someone is going to claim easement and/or adverse possession rights.

Finally, if an item shows up on the survey that causes concern, like a neighbor’s fence encroaching on the listed property, email your buyer the recommendation that they consult with a real estate attorney to discuss a potential issue.

There are things that you can prevent, and there are things that you can’t. The ability to avoid getting caught in the crossfire of buyer’s remorse is something that you have a significant level of control over. Implementing the strategies listed above and recommending the use of an attorney, when necessary, will drastically reduce the chances of being dragged into unnecessary, expensive and time-consuming litigation. It is always better to participate in a case as a fact witness than as a defendant. #

David J. Miller is the Managing Partner of David Miller Law, PLLC, located in Largo and is Of Counsel with Lucas, Macyszyn & Dyer Law Firm.