buyer freaks out
Such a relief that I am not on the receiving end anymore when a buyer freaks out, but I do feel the ramifications when it’s the buyer in my transaction with cold feet and it’s my seller who is affected. In this instance, it’s neither of those situations, which is why I can tell you what happened. Because it’s not my transaction. But it is a transaction that almost happened, then didn’t, then got yanked out of the fire and resurrected.
Say an agent has a home listed in Fair Oaks. Along comes a buyer, the offer is accepted and escrow is opened. Then the buyer’s appraisal comes in for less than list price, and the seller decides to let that buyer go along his or her merry little way. New buyer pops into the picture. Writes an offer agreeing to bridge any difference in appraised value, but whoa! The appraisal comes in not at the previous appraised price like expected but another $30K less.
To put this into more clarity, let’s reiterate with numbers. Let’s say, just theoretically speaking, that the first offer was $350K. The appraisal came in at $330K so the seller canceled. Then the new buyer agrees he will bridge the gap, pay the $20K difference in cash if it comes down to it and offers $350K. Except his new appraisal is $300K. To bridge THAT gap, it would cost the buyer $50K. Yikes. What do you do? Could be a potential situation in which a buyer freaks out.
The agent, being a creative genius, says let’s go with the first appraisal from the first buyer. She calls that lender for whom the appraisal was completed and switches her buyer to that lender. The lender pulls a bunch of rabbits out of hats and gets the loan approved for the second buyer in record time. Loan docs are delivered to escrow. Everybody is ready to sign.
What are the odds that the second buyer freaks out? Why would the buyer get cold feet? I guess nobody has the answer to those questions. The only thing everybody in this situation knows for certain is the second buyer has decided to cancel at the 11th hour.
There is only one thing an agent can do. Send the cancellation to the listing agent, along with an offer from a third buyer (in the wings) at $330K, and an approval letter from that lender who prepared the first appraisal, plus include a contingency release for inspections based on existing reports. You can’t stop an existing buyer from getting cold feet. You can’t talk the buyer out of canceling, nor should you. The buyer will learn soon enough he is not buying a house, no matter what.
What an agent can do is focus on the new buyer who suddenly has become an extremely lucky person.