By Maegan Carter, Staff Writer
You’ve been working on this deal for a month or so. After all the promotion, showings, phone calls, inspections, and paperwork you’re more than ready to sit at that closing table in a few days. When you aren’t on the phone, prospecting, or social media marketing you daydream about how you could best spend this commission. Maybe you’ll pay off a credit card. Perhaps you’ll shop for that special occasion. And you’ve always wanted to travel abroad. You start browsing online when a call comes in that chills you to the bone. “What do you mean it’s fallen through?” you ask while thinking to yourself, we did all the right things! This can’t be happening!
While the October 2022 National Association of REALTORS® (NAR) Confidence Index reports 7% of contracts were terminated over a three-month period, most purchase agreements do make it to the closing table. To help avoid the nightmare and crushing of dreams it’s best to take a cue from the Boy Scouts: be prepared. There are a few common reasons why sales don’t reach completion, and thankfully, there are also things you can try to help prevent that from happening. Think of them as “the three C’s.”
COMMUNICATION Inspections are important for both a buyer and seller. Sometimes things are discovered following an inspection that can cause a buyer to back out of the deal. As a buyer’s agent you want to make sure your client gets the home inspected. If an issue arises, you can suggest they request the seller fix issues prior to moving forward or possibly renegotiate the price. As a seller’s agent, you can suggest the seller has an inspection prior to putting the home on the market so they can address potential problems and there are fewer headaches down the road. If they don’t wish to go that route ensure they disclose any issues, so buyers are aware before signing anything. No one likes being blindsided. Open and honest communication goes a long way.
CONTINGENCY A contingency is a clause in a contract stating conditions that must be met, typically within a certain period, for a contract to be binding. Some of the most common are inspection, appraisal, financing, and home sale contingencies. As a buyer’s agent, they can allow your client to cancel or renegotiate a contract dependent upon an inspection as well as allow them to back out if they can’t secure financing, often without losing their earnest money. However, if there are too many it can push the seller to go another way, especially in a multiple offer situation. As a seller’s agent, one of the few that benefit your party is the kick-out clause. It allows them to continue to market the property while under contract so that if another qualified candidate comes forward, they can accept that offer after a specified amount of time. Depending on the state and province, contingencies can be written by either the real estate professional or a lawyer. If certain conditions haven’t been met, it doesn’t always mean the contract is canceled, but it can push a deadline further and prove costly. Be sure that all contingencies are taken seriously, and timelines are followed.
CLARITY When you look at a listed property it’s simple to assume the seller is the owner and therefore has the right to sell the home, but that isn’t always the case. While it’s most commonly the buyer’s responsibility to have a title search conducted, it can be prudent to have the seller do the same. In rare cases, the seller isn’t even aware they have certain liens on the property that would prevent them from selling. Mortgage liens and other debts like unpaid property taxes follow the property not the owner so this is vital information to have.
In reality, far more sales make it to the closing table than not. That’s not to say you’ll never have to jump hurdles or make concessions to get there, but maybe, to be safe, just hold off on booking that vacation before the check clears.
Find more stories and articles like this in the latest edition of the EXIT Achiever.
