Buying real estate in New York City can be incredibly stressful, particularly if you’re new to it. While there’s a large time commitment required to identify the right property, buying a home in this city also requires a significant amount of money. Once you’re prepared to act, it’s essential to move quickly to get the deal done. However, if you act too fast, you may end up with buyer’s remorse. You may feel absolutely trapped, with significant resources at stake. It can be a devastating feeling, and can diminish your ability to think rationally.
How Do You Avoid Buyer’s Remorse?
The key to avoiding this feeling is to work slowly and methodically on your decision to purchase a specific property. Do you like the actual property? Do you like the neighborhood? Is there anything that you’re concerned about that’s been left unanswered? Maybe you’re not even sure whether you should be buying at all!
It’s essential that you work at your own pace with a broker that understands your motivations. Never let yourself be pushed into any decision by anyone. When you’re able to reach a decision on your own, with no external forces pressuring you, you’ll feel significantly more confident about what you’ve just signed up for. But, if you have made an offer on a property that was accepted and you’re now having some remorse, read ahead for tips.
Ways to Get Out of the Deal
1. Don’t sign the contract.
During the period when a buyer’s offer on a property was accepted, but the contract has not yet been signed by all parties, if there is any hesitation on the part of the buyer – you — it’s time to withdraw from the contract. Don’t sign it. Tell your broker and lawyer you do not want to proceed.
2. Leverage contingencies in the contract.
If you have any contingencies in place, such as the ability to get financing — which may be dependent on your income and property appraisal considerations — this might offer an opportunity to get out of the deal with no legal consequences. Simply put, if you have a mortgage contingency in your contract and you can’t get a mortgage, you can choose to walk away. If you don’t have contingencies in place, you’ll be much harder-pressed to find an easy way out.
3. Walk away from your down payment.
This is not ideal, and nobody likes the idea of doing this, but it’s one way to break the deal. By breaking a legally binding contract, you open yourself up to litigation. However, forfeiture of your down payment generally satisfies the seller in return for breaking the contract. There may be economic reasons that a buyer would be comfortable losing the down payment. For instance, if a buyer purchased pre-construction, and by the time closings are set to begin, prices have dropped by more than 10 percent. This happened after the 2008 economic downturn.
4. Assign the contract.
You may be allowed to assign the contract to another purchaser. This can give you the out that you need, but will require you to find a buyer who’s willing to have your contractual obligations assigned to themselves. Generally, this is much easier for new development and pre-construction. However, most developers will not offer the right to assign, which must be included in the contract of sale.
5. Find issue with the contract or offering plan.
If you look closely enough, you may be able to find a small detail in the contract or offering plan that will enable you to get out of the deal. Perhaps this detail is a mistake or error that puts the seller in breach, or perhaps there’s something that was placed in the document that is intentionally deceptive. That doesn’t mean you’ll be able to get out of the deal without a legal fight. There is a well-known case of a would-be buyer finding a wrong date in the offering plan and filing suit with the state attorney general. After dozens more buyers joined the suit, Extell Development had to refund $16 million in down payments. Of course, this only happened many years after the suit was filed.
6. Speak with your broker and lawyer.
Your real estate broker and lawyer will be able to give you honest feedback about your current situation. They may be able to contact the seller’s representatives and help negotiate an out that won’t involve losing your entire down payment. NYC real estate lawyers are required for each transaction.
What If I Already Signed the Contract?
Once you have a signed and fully executed contract, you’ll have also put a 10 percent down payment into escrow. Your ability to get out of a deal is going to be fairly limited since there’s now a legally binding contract committing you to the purchase. Again, if for any reason you start feeling like pursuing the deal is no longer ideal, contact your broker and lawyer immediately. While the chances of being able to amicably walk away from a deal are limited, by contacting the parties that represent you, you may be able to think of a way out.
Summary
The best way to avoid the potential consequences associated with buyer’s remorse is to avoid it completely. Take your time when deciding on a property, and make sure your decision is yours alone. Work with a buyer’s broker that represents your interests and guides you step-by-step through the purchasing process, and work with a real estate lawyer that will advocate for your contractual rights by establishing contingencies.
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