Often real estate sales and purchases are dependent upon another real estate transaction completely out of your control - and we call that "domino real estate transactions." I'm involved in two of four transactions scheduled to all close on the same day, and here's how the tiles are stacking up now.
Transaction 1: First-time home buyers are relocating to Tulsa from another state. They are currently living in a small studio apartment that they are able to rent month to month. Inspections resulted in more required repairs than contractually agreed upon. Nervous parents want all repairs made and Buyers have no money to chip in.
Transaction 2: The home Sellers of Transaction 1 are under contract to purchase a larger home (Transaction 3) for their growing family. They have already had to spend more than budgeted on repairs.
Transaction 3: The Real Estate Gods were not shining on us when the appraisal on this property came in $6,000 below sales price. Now the Sellers of this home are faced with netting $6,000 less on their sale, which may prevent them from purchasing the home they are under contract to purchase.
So, the Sellers of Transaction 3 asked their Buyers to accept less Seller assistance towards closing costs. Refer back to Transaction 2 - these Sellers/Buyers are already over budget for repairs and need the closing costs originally agreed upon.
Transaction 4: This of course is the property that the Sellers of Transaction 3 are purchasing. I have no clue where the Seller of this property is going.
The successful completion of Transaction 4 is dependent upon the successful closing of Transaction 3, which is dependent upon the successful closing of Transactions 2 and 1. You can see how the domino effect works in real estate transactions.
Domino Real Estate Transactions
Because of the low appraisal and lower net at closing, the Sellers of Transaction 3 may not be able to complete their purchase of Transaction 4. If they can't complete their purchase, they can't sell their home. And THAT means their Buyers will have to stay in the home they've outgrown, and their Buyers will stay in their studio apartment and look for another home to purchase.
In these cases, everyone needs to pitch in - Seller, Buyers, Realtors, and Lenders have to work together to find solutions - and spread the pain. At the end of some very long negotiating, the Buyers in Transaction 1 modified their list of repairs; the Buyers of Transaction 3 reduced the amount of closing costs requested and two Realtors accepted a lower commission. It may not be ideal, but everyone pitched in what they were able, and it looks like we will all successfully close.
When we experience domino real estate transactions, nobody wins unless they are all successful. Make sure you have an experienced real estate professional in your corner who can see the big picture.
Please call me if you have a home to buy or sell - I'm a level-headed negotiator and a great advocate for my clients! 918-852-5036
Content written and published by Lori Cain.
Copyright 2012 Lori Cain All Rights Reserved - Originally Posted at: Midtown Tulsa Real Estate - Lori Cain
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