Picture it: You worked tirelessly alongside a buyer, expertly guiding them through their new home buying journey. During this time, you pinpointed their hot buttons, walked through multiple homes that meet their family’s specific needs, and finally showed them “the one” they had been looking for. Contracts were drawn up, and calls regarding financing were made. And then, seemingly out of nowhere, the home buyer backed out last minute.
Reasons for home purchase cancellations
Though hypothetical, the above situation is one that sales agents across the nation encounter frequently. Home buyer cancellation rates have skyrocketed over the last few years. According to Redfin, about 56,000 home purchases were canceled in June 2024, equal to 15% of homes that went under contract—the highest percentage of any June on record.
The reasons behind home purchase cancellations are vast and varied; however, according to Money.com, some of the leading causes include:
- Surging mortgage rates
- Home insurance market challenges
- Changes in the buyer’s financial situation
- A mortgage lender withdrawing a loan commitment
- Believing they are not getting a good deal for the home
How to save a sale
A buyer backing out of a home sale is stressful, but it doesn’t have to be the outcome. As a sales consultant, it’s your responsibility to know how to save a sale. Dig deep to learn the reason for the home purchase cancellation, determine if there’s a solution to the problem, and move the deal forward. Set an in-person appointment with the home buyer to better connect and gain their trust. Discussing their concerns face-to-face, along with some reassurance, can go a long way in getting the sale back on track.
Rising mortgage and insurance rates
Buyer apprehension about mortgage and insurance costs has been steadily rising along with the rates. Know your builder’s incentives, including mortgage rate buydown, and explain how that can help reduce costs. In terms of skyrocketing insurance rates, clarify that the age of the home impacts the premiums that insurance companies charge. Buying a newly built home will give them the lowest possible insurance rate compared to a pre-existing home, even if it’s only a few years old.
Changes in financial situation or loan withdrawal
Unexpected life changes can throw a home buying decision in flux. You must be empathetic and remind them that you are there to support them through the home buying process, even if that looks slightly different than when you began. Have open communication with your sales manager about the situation; there may be solutions available that the buyer wasn’t even aware of. If the buyer’s mortgage lender has withdrawn a loan commitment, let them know that you have trusted lenders they can speak with and give a breakdown of what the monthly payments would be.
Believing they’re not getting a good deal for the home
Sometimes, buyers back out of a home sale because they’re second-guessing the value of the home. When this happens, re-engage the emotional spark of why they loved the home in the first place. Take this as an opportunity to teach them how much they will lose by letting the house go. Explain that buying a home is a long-term investment and calculate the amount it would cost to replace the home if they were to start their build from scratch to really show the equity in value they already have. It will also help to show the home buyers recently sold homes similar to theirs so they can see the appraised value. This will increase trust and show them that you are not trying to oversell.
Avoiding home purchase cancellations in the future
Home purchase cancellations will happen; however, by summarizing everything you've learned about a buyer’s purchase decision, you can keep these situations few and far between. Remember: Customers buy with emotion and justify their decisions with logic.
The best way to save a deal is to communicate proactively during backlog management. You should preemptively prepare your communication to be strategic based on their hot buttons and create an exceptional experience as their home gets ready for closing.
