I recently closed on a listing I had in Evesham Township, NJ and luckily had escaped what I call The Domino Effect. This is a phenom in real estate (okay, not quite a phenomenon but that adds to the effect) when one closing relies (or is contingent on) one or more other closings occurring. In my case, our closing depended on another house to close so the buyer had the funds from that property to purchase our listing. That buyer's house also needed another property to close, thus a domino effect is created. Of course, if either of the other properties failed to close, we could not close (a contingency in the agreement protects the buyer from default).
So why did we take this offer if it was so risky? My client had an attorney (whom I recommended) who also asked question us accepting the offer. 1st, offers are not easy to come by (particularly those sellers will actually accept in price). We had other offers, but the prices were not acceptable. 2nd, we evaluated the motivation of the buyer and, all things considering, the property seemed like a perfect fit for this particular buyer. 3rd, financial and qualifying standards (outside of needing his current property to close) were excellent. 4th, the other properties in the chain were already under contract with buyers. 5th, there was a 45 day closing period (not too long, yet enough time to get things done and determine any issues).
Another major factor in our decision-making was the fact that I knew the other agents handling the other closings. This was the most important factor for a successful close. Imagine, friday starting off Memorial Day weekend and you need 2 other properties to close for your sale to go through. As an agent (and seller), you better be prepared and on top of EVERYTHING! We were.
Throughout the entire process I had open communication with the other agents and followed the other transactions as if they were my own (mortgage commitment - check; inspections - check; appraisal - check; financials - check). The 1st property in the chain even needed to remove an underground oil tank and have soil samples! That agent was on top of it and everything went according to plan (though some sweating was involved). Our closing was the final closing of the day (2pm) and I was out by 3pm.
As a seller, be cautious of the Domino Effect, but putting your transaction in the hands of the right professionals (agents and attorneys) should yield a success story!
Comments(2)