You’ve experienced “it.” Every agent has. The sinking feeling when the deal falls apart before it reaches the closing table. To avoid this, bulletproof your transactions!
“In a changing or shifting market, bulletproof transactions are the difference between those that survive and those that don’t,” says Keller Williams agent Karen Scully of the Ballantyne Area (N.C.) market center. It’s not just about protecting the sale. It’s about “creating the best experience for our clients in such a way that they will always keep us top of mind.”
Tammi Juengst, a BOLD Coach from the Lake Norman-Mooresville (N.C.) market center, drives home how deals that fall apart can create a disastrous domino effect.
“Ultimately, the largest risk is that you have a failed sale and an unhappy client,” she says. “Since the majority of our business should come from our sphere and past clients, the risk of having an unhappy client far exceeds the transaction you are in with them today.” If agents bulletproof in advance, have systems in place and communicate often, the success of the sale is higher. When the client is happy, they’re more likely to use their agent again and send referrals.
Why do deals fall apart?
As agent Sarita Dua of the Portland West (Ore.) market center points out, there are many reasons a transaction might fall apart.
“It could be due to the inspection, the appraisal or any other contingencies,” she says. “It could be due to the lender. It could be due to a co-op agent doing their job poorly. It could be due to the market and the buyer’s attitude going into that market. For example, in a seller’s market, with very limited inventory like our current market in Portland, buyers sometimes have to make a decision quickly, which will require them to pay quite a bit over asking price. This is where buyer’s remorse sinks in and the deal falls apart.”
On the other hand, a buyer’s market is not immune to failed transactions either.
“Because all markets are cyclical, we have been in a buyer’s market where there is an abundance of homes,” Dua continues. “In that situation, a buyer may want to continue to negotiate with the seller with no fear of losing the house as there are several others that may work for them.”
Dua, Juengst and Scully agree that some of the biggest reasons deals fall apart are unreasonable expectations on behalf of the buyer or seller, poor communication, the buyer’s inability to secure financing, negotiations around repairs, appraisals coming in lower than the contract price, and a lack of solid systems in place.
By implementing solid systems and models, agents can stop the transaction from going south. For example, Scully bulletproofs transactions regardless of if she is representing the buyer or seller with a “halfway check-in” system.
“This is an email or call from our director of operations ensuring that they are pleased with the level of service we’re providing during the transaction,” she says. “While our listing or buyer agent is in constant contact with the client, we thought it would be beneficial to get some feedback midway through the transaction as opposed to waiting until the end of the transaction – because at that point, it can be too late.”
Be Prepared to Save The Day
Often, systems are put into place after the implosion of a transaction or a close call. “An example is a buyer using a lender they found from the internet with rates ‘too good to be true,’ Dua recalls. “When it came time to close, the lender was three weeks behind and did not care.”
Unfortunately, this is all too often the case because most lending solutions are designed with the lender in mind. Keller Mortgage is one alternate option for KW buyers and buyers of KW listings. The company was launched specifically to create a differentiated value for a KW agent’s business and a true win, in terms of thousands of dollars in savings, for their clients.
While working with a reputable lender like Keller Mortgage upfront is always ideal, there are steps an agent can take should they expect that the lender the buyer chose will not be able to deliver. In one specific instance, Dua coordinated with her lender partner, who kept the file open and swooped in to save the transaction in the final hour. While it was still delayed, thanks to good communication with the seller’s side, she was able to up the ante on earnest money to mitigate the risk and show goodwill.
When you have an effective handle on the situation and a solution in place for when things start going south, that’s when you truly show off the value you add throughout the entire real estate transaction.
Make Sure Financing is Secured
Because financing can fall apart, Juengst recommends early conversations on both the buyer and seller sides to prevent the issue from derailing the transaction.
“When working with buyers, make certain they are fully preapproved,” she says. “In the lending market today, there are many lenders who do a full approval that includes underwriting prior to the buyer finding a home. Not only does this give you leverage in a multiple offer situation, it also greatly reduces the risk of the transaction failing because of financing.”
“When representing a seller, after receiving an offer, make certain that the buyer is fully pre-approved,” Juengst continues. “Have a conversation with the buyer’s lender, ask questions about their pre-approval process and how in-depth the pre-approval is. If the sale had multiple offers, have the seller choose a second offer and request the buyer to agree to be a backup offer in the event the first offer falls apart.”
When considering a lender that provides seamless financing, Keller Mortgage is an excellent option. Consumers begin the process with the touch of a finger on theKeller Williams home search app and experience prompt customer service.
Discuss Appraisal Scenarios
When sellers receive multiple offers and properties go well above asking price, appraisals become a threat to a successful closing.
“Initially our team would discuss various appraisal scenarios at a listing appointment, taking for granted that the information remained top of mind with the sellers throughout the transaction,” Scully says. “After an experience where an appraisal didn’t come in for one of our sellers and our team nearly lost the listing and sale, we decided to put a three-step process in place to ensure this wouldn’t happen again. We now discuss possible appraisal scenarios at the listing appointment, our follow-up listing appointment and once we know the appraisal has been scheduled.”
Juengst suggests going on the offensive to prevent a low appraisal.
“Make sure you’re notified about the day and time the appraisal is scheduled,” she says. “Do homework on comparable sales in the last six months and print those MLS sheets for the appraiser. Leave all of them on the kitchen counter with a note to the appraiser to take them. Appraisers are sometimes very busy, so taking the time to do research for them can pay off. Have your seller put together a list of improvements they’ve made to the property since purchasingand leave that for the appraiser to take.”
When Buyer’s Remorse Sets In…
During the transaction process, your buyers may second-guess their decision to buy a home; this is called buyer’s remorse.