Bidding War Winners Are Getting Cold Feet
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Some home buyers are reportedly backing out of purchase contracts due to second-guessing the contract price. That is prompting some listings to return to the market after a bidding war.
Fifty-four percent of more than 1,100 real estate professionals recently surveyed by HomeLight, a real estate referral site, said they have seen or heard of buyers backing out of contracts after having regrets. The trend is most common in the Northeast and Mountain regions of the country, where most agents reported buyers backing out of contracts.
After losing out in several multiple offer situations, a buyer may head into a new bidding war with an “I’ll offer anything” attitude. “They win and for a moment they’re happy about it,” the report says. “But now they have several weeks to mull over their decision before the deal closes. They crunch the numbers again and experience pangs of regret over the ridiculous price they agreed to pay. They begin to obsess over flaws with the home that they initially overlooked.”
So then they approach their real estate agent to look for a loophole and a way out. It may be through the inspection contingency, assuming they didn’t waive it.
But once they walk away from the deal, “the house goes back on the market with a stigma that there’s something wrong with it,” the report notes. The trend is playing out more often as bidding wars for a limited number of houses have grown more commonplace.
Source: “Top Agent Insights: Summer/Fall 2021 Report,” HomeLight (2021)