As a real estate broker and also the CEO of two companies that provide services to agents, I oversee a lot of transactions—probably between 800 and 1000 per year. And, sometimes I see things that could easily be managed differently and the result would be a much more positive outcome. It’s true that sometimes transactions don’t go exactly as expected. (Actually, 100% smooth transactions are usually few and far between.) But, it is how the agent reacts to the hurdles along the way that sets the course for a successful transaction.
How to Set the Course for a Successful Transaction
Here's a list of things that can happen and ways you should not behave if they do.
- Transaction will not close on time. Not sure about the rest of the United States, but in Southern California many transactions do not close on time—particularly those that involve obtaining a mortgage. With all of the lending guidelines, getting to the closing table on time is like walking on a balance beam: once big wind or false move and you may have to slow down and regroup. Savvy agents know that it is tough to close transactions on time, and those agents tell their clients that is a certain level of flexibility that may be required with respect to the closing date. Savvy agents do not threaten to cancel at the 11th Think about it: If you cancel, you’ll have to find a new buyer and start the entire process all over again. Wouldn’t it be better to just wait the 48 hours and cash in?
- Buyers cannot remove loan contingency on time. It’s not smart to pitch a fit or throw a tantrum if the buyer cannot remove the loan contingency in a timely manner. What you should do instead is identify why the contingency cannot be removed. Is there some deeply rooted issue that may hamper the buyer’s ability to close, or was there merely a delay in processing some paperwork or receiving the appraisal? If you see that things are going sideways, pick up the phone and have a conversation. Try instead to identify the issue and work with the other agent to find a reasonable solution for all parties. Bullying or ignoring the issue may come back to bite you in the long run.
- Appraisal doesn’t come in at value. It doesn’t matter whether 57 people offered over the asking price on the home and your seller accepted. You’ve got to advise your clients that while the accepted offer price is very nice, the loan appraisal may not support that. Many buyers and sellers do not understand that if the current buyer cancels because the appraisal didn’t come in purchase price and the seller doesn’t want to lower the price, then the appraised value is a material fact that must be disclosed to all future buyers. I’m not sure how many buyers would be willing to pay more than the appraised value for a home. It would have to be a really, really amazing place to convince me to pay over market value. Listing agents should do everything in their power not to allow a low appraised value to blow the deal. Disclosing the value to future buyers could make it more difficult to sell the property to the next guy.
Set Expectations Accordingly
While my rant may fall on deaf ears, it is vital that agents set expectations with their clients accordingly. When I see deals fall through or begin to implode, it is usually because the agents involved could not manage the issues that came up: that they resort to email, avoid confrontation, and do not make phone calls or set appointments to work towards possible solutions. Remember that a buyer’s agent and a listing agent are like pilots. While you cannot guarantee that there will be no turbulence, you can however fly the plane in such a way that there is less turbulence.
That is your job as an agent: to mitigate the challenges and issues and try to make the transaction as painless as possible. The bottom line is this: If you haven’t flown lots of planes and do not know how to avoid the turbulence, then you absolutely need to work with a co-pilot. Think about it and answer honestly: Would you actually want to get on a plane with a pilot who has flown only 8 flights? Now… look in the mirror.