Is Rescission a Malfunction in Your Selling Practices?
A homeowner’s right to rescind is not a quick prescription for buyer’s remorse. But many salespeople describe it that way.
A homeowner has the legal right to cancel a contract within 72 hours, or three business days. It’s an inevitable, and manageable, part of doing business if you’re selling in the home. And here’s the rule of thumb for rescission: If the size of your contract is $4,000 to $5,000 (or less) rescinded contracts should be minimal. If your average contract is $8,000 to $12,000, rescission should never exceed 10% and be less with proper sales training. If your contract exceeds $25,000, your rescission rate might be higher. In all cases, some portion of this is recoverable, under a designed cancel/save program.
If you have little or no rescission, it’s probably because you’re doing second and third calls and not really trying to close in the majority of cases for the most part.
In-home salespeople are required by law to display visually and to explain orally to customers their right of rescission, then furnish them with a written explanation and obtain signatures to verify that all this was done. (Specifics vary by state.) Rescission was created to protect homeowners from unscrupulous sellers employing deceptive tactics. It’s not an assurance that they don’t have to live up to the terms of the contract they’ve signed. Nor is it an invitation for them to change their minds about signing it. The salesperson who misstates the 3 day right to rescind and the purpose and uses this as a close or “credibility statement” does himself and his company a disservice by inviting rescission.
When customers who rescind are asked why they are canceling, the most stated reason deals with price. In all probability, the salesperson failed to establish need for the value of the product as being equal to, or exceeding the price agreed to.
Well-run companies track, on a weekly basis, a minimum of five sales metrics: leads issued, presentations, sales, “credit sales” pending, and rescissions. The most efficient way to track rescission is to break it down per salesperson. Identify those whose rescission rates are unacceptable. This sends a message to salespeople that it’s not okay to have a high rate of rescission.
Then supply salespeople with proper language. In fact, well-run companies even tell salespeople to say before they leave with a contract: “If you feel a reason to change your mind, let’s discuss it now.” After all, if there is doubt, this is the best time to resell your company, your product, and your price.