Back in 1990, I received some of the best advice I ever received in real estate. You know how hard you work to get a listing sold or a buyer under contract. Then you hold your breath, get out your tap-dancing shoes and imagine you are walking on egg shells until you walk away from the closing table. In some instances, that’s really true given the jittery and unpredictable nature of some people under stress, whether they generated it or not. The advice was: "when you're in a situation with a client and, you know something you don't want to tell them, you proably should".
As you’re zipping towards closing, there are the inevitable speed bumps that can slow things down and, if not handled promptly and effectively, derail the closing. This usually takes the form of anything the buyer considers to be “bad news”. Some examples could include: buyer didn’t lock-in and the interest rate has gone up; the home inspection turned up 7 repair items including a roof that needs replaced; the radon test came in way over 4.0; the appraiser doesn’t think he’s going to make the contract price; there are termites from top to bottom and so on.
How and when you deliver the bad news is critical. The longer you wait, the more likely everyone is going to mad at you and, it may not leave enough time to explore alternatives. It is so very important that you prepare your buyers, essentially, to expect that challenges/problems are potentially going to come up in all of the above areas, but there is usually a way to work things out and, that doesn’t mean out of your commission!
As a Buyer Agent, it is your job to remind them to think about when they want to lock their rate; that it is the home inspector’s job to be critical when inspecting a property (few houses are “perfect”); if a roof needs replaced, there are many ways to do it, e.g., increase the contract sales price by ½ the cost of the roof and purchaser pays the other half; radon gas is, literally, everywhere and usually a problem in poorly ventilated or vacant homes. The fix in our area is fairly simple and cost $750-$1,000. Handling a low appraisal is more difficult and will depend on a lot of factors: did the buyer have to bid or just “over-pay”, is either the buyer or seller in a cash position to negotiate making up the difference? Did the appraiser miss a relevant comp? Termite problems can range from a simple treatment to many $thousands of dollars in treatment and damage repair.
Sometimes you need to run interference or get clarification before you present the bad news. Be as informed as possible; be prepared with viable options, if any. Most of all, unless it is really something horrific, go in with the friendly expectation that this can be worked out. In my experience, when you have a disagreement over dollars and repairs between a buyer and seller, as a Buyer Agent, we need to look at not “who’s right”, but “what’s right” in making our recommendation for resolving the impasse. Your client may or may not go along with your recommendation, but will know that you were honest and acted with integrity, which I hope we all do when presented with similar situations.
How do you handle delivering the bad news?
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