Buyer Psychology Is Now the Biggest Deal-Killer in Luxury Coastal Real Estate

Written by:

Rudi Davis

Date:

12 Feb 2026

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In today’s luxury coastal markets, the usual reasons for failed real estate deals — financing issues, inspection surprises, or low appraisals — have largely faded into the background. Instead, buyer psychology has become the main factor causing high-end transactions to fall apart, according to Edward Freeman Jr., Managing Partner at The Freeman Group on Long Beach Island, New Jersey.

“If we see a transaction go south right now, it would be more from buyer cold feet or buyer’s remorse rather than an inspection issue or financing,” Freeman says. In his market, financing-related deal failures are rare, and inspections seldom derail sales.

This marks a clear shift from traditional patterns. On Long Beach Island, where average sales prices have nearly doubled in recent years — from under $1 million to close to $2 million — the emotional weight of making such a large discretionary purchase is now the most common weak point in the transaction process.

The Emotional Toll

Freeman notes that even buyers with the means to purchase and secure financing sometimes walk away from deals. “Most transactions, once we get them under contract, are closing,” he explains, “but when they don’t, it’s usually not because of the inspection or the loan.”

This trend highlights how quickly rising prices can alter buyer behavior. When a property that once sold for $900,000 now commands $1.8 million, buyers may start to second-guess their decisions, regardless of their financial qualifications. The price increase creates new scrutiny and hesitation, especially in markets where purchases are driven by lifestyle rather than necessity.

Long Beach Island is a prime example. The 18-mile barrier island is just three blocks wide and primarily serves the vacation and second-home market. “There’s not a lot of year-round residents here. It’s more of a vacation hotspot,” Freeman says. Because most buyers are purchasing discretionary properties, they are more prone to pause or reverse course if doubts arise.

Testing the Limits

The pattern of buyer remorse also raises questions about whether the market is approaching a psychological ceiling, even as prices continue to rise. Freeman observes that “there’s definitely some ability to negotiate again,” attributing it in part to sellers listing homes above what the market will currently support.

This environment leads to a standoff: sellers test higher price points, while buyers hesitate or pull out if the numbers feel too stretched. Unlike financing or appraisal hurdles, buyer remorse is subjective and unpredictable, making it harder for agents and sellers to gauge actual market demand.

Freeman also notes a change in negotiation dynamics. During the height of bidding wars, buyers often acted quickly out of fear of missing out, rushing to secure properties before prices rose further. Now, with buyer psychology working against it, caution is taking over. The fact that remorse is the primary reason for failed deals suggests the market has moved past the frenzied phase into a period of heightened uncertainty.

Implications for Coastal Sellers and Agents

For sellers and agents in luxury vacation markets, Freeman’s experience is a warning that getting a property under contract is no longer a guarantee of closing. The stretch between contract and closing, once a routine formality in cash-rich markets, now demands careful attention to buyer confidence and commitment.

Freeman expects prices on Long Beach Island to keep rising over the next year or two, but he sees the recent uptick in buyer remorse as a potential early warning sign. If more qualified buyers start walking away from deals they can easily afford, it may indicate that the market is approaching a natural limit, regardless of the numbers.

It remains to be seen whether this pattern is unique to vacation-oriented coastal markets or will emerge more broadly across luxury real estate. For now, Freeman’s observations make clear that in high-priced coastal areas, the biggest threat to a deal isn’t a failed inspection or a loan denial, it’s a buyer who gets cold feet just before closing.