The goal: More listings, of course.
Building a solid real-estate portfolio takes time and talent, as well as plain old good luck and common sense.
But experience and numbers do offer a huge advantage when looking to land potential clients and more listings. So what does a real-estate agent do to ensure they’re rocking an all-star resume?
The answer is to make every deal count.
Successful sales beef up your portfolio, and make signing more listings easier than ever.
That’s why you need to be able to take every listing you land from start to finish — (aka “sign on the dotted line,” and “welcome to your new house!”) — a tricky feat considering the many real-estate sinkholes and land mines that can shut down a deal and totally ruin your day.
Understanding the most common culprits of “deal-failure” is essential.
You'll be more prepared, and more importantly — be able to plans in place to navigate those “property-sale-speed-bumps” with the deal intact and on track.
1. First-time Buyer Issues:
It’s important when dealing with “newbies” to ensure that they have a mortgage pre-approval in hand before beginning their home search.
Ed Conarchy, a mortgage planner and investment adviser says:
“You get pre approved, and then you find a home. That way, you’ll make a financial decision versus an emotional decision.”
It’s tempting for new buyers to begin perusing properties the moment they decide they’re ready to buy — but experienced agents know the importance of getting new clients to obtain their pre-approval beforehand. Not only does the pre-approval process help establish a realistic budget, it also helps make any offer the buyers may submit more attractive to sellers.
Deals most commonly fall apart due to financial complications.
With first-time buyers, you’re often dealing with satisfying FHA loan requirements. Not necessarily a deal killer on its own, the use of an FHA loan does usually mean you can expect to be jumping through a few extra hoops.
If the property/house is old, there’s a higher likelihood that inspections will bring to light issues that FHA has strict standards for resolving.
With your first-time-buyers, it pays to communicate common pitfalls in advance.
This puts both you and your buyer in a better position to prepare for (and survive) the obstacle course of financing and inspection issues so you can make it all the way to closing.
For a seller working with first-time-buyers, understanding the possible complications also helps guide their decisions to ensure that both parties are satisfied.
You can’t be in the business long before you encounter an inspection report that creates a panic heard round the world…or at least in your office. It’s time to break out your best damage control skills. (and maybe a box of tissues)
The heavy-hitters of inspection-deal-smashers are:
- roof problems
- foundation issues
- mold issues
- plumbing problems
A few notable additions to that list would be outdated electric, flood-zone location, and pest infestations.
If any of the above heavy-hitters make an appearance on the inspection report — whether you represent the seller or buyer — major red flags are sure to pop up.
Sometimes, those inspection findings should break the deal.
When a home has significant foundation, plumbing, or environmental issues, sometimes the best path is to advise your client to cancel the contract and find a better property to invest in.
However, more often, the issues that are uncovered shouldn’t be deal-smashers.
With further investigation and/or negotiations with the seller regarding repairs, the inspection report nightmare can be put to bed.
It’s important as an agent to try to provide your clients with peace of mind as the situation unfolds.
Be certain to answer all calls and emails promptly, and be prepared for some hand holding until a resolution is reached.
As a seller’s agent, it’s a difficult task to decide what should be done to resolve these issues considering the potential cost and potential hit the hoped-for sales price might suffer.
Bring in an expert.
Whether or not the seller wants to resolve the problem or not, with a specialist on the job, he’ll be better equipped to make that call.
Should he decide against resolving the issue, he’ll have a reliable, detailed explanation of the problem and recommended solutions that he can pass on to buyers, or use during negotiations.
(All situations are different. When advising clients regarding home-inspection-monsters, an agent must, of course, consider each case individually.)
3. Low Appraisals:
The average home buyer needs to take out a mortgage. Lenders often require those home buyers to pay for an appraisal to determine the value of the property.
A deal can fall apart if that appraisal comes in lower (usually $10k or more) than the sale price. But it doesn’t automatically spell the end of your deal.
There are five “solutions” commonly turned to in the case of the low appraisal:
- Buyer agrees to pay the difference in cash
- Challenging the appraisal by providing comps to support the original price (not a popular option, as it’s not easily won)
- Set up another appraisal with a different appraiser
- Give the seller a second mortgage for the difference
- Ask the seller to reduce the price (Eek! Also, not a popular option)
If none of the above “solutions” can be agreed upon, then unfortunately, the deal will most likely be smashed. So frustrating!
4. Contingent on Sale of Buyer’s Home
The sticky-wicket here is that when a “contingent on sale” offer is accepted, most seller’s contracts include an allotted amount of time for that sale to happen.
If it doesn’t, then the seller is free to put his house back on the market.
Which means the clock is ticking.
If you represent the buyer, then you’ll want to be working double-time to get their house sold, or their new home deal will disintegrate.
Representing the seller can be just as nerve-wracking, since it’s really just a big waiting game. As a seller’s agent, when considering offers that are “buyer-home-sale-contingent,” it’s always wise to do some research into their property and determine the likelihood of a successful sale before accepting the offer...you may be able to avoid a sinking ship altogether.
5. Real Estate Agent Error
This one hurts, but unfortunately, too many times agent mistakes account for deals being smashed to smithereens.
Agents are the “experts” on the ground, and buyers/sellers rely on them to use their knowledge to reach a successful outcome. While some clients may have experience with the process, a great many more will be uncertain about the myriad of details and obligations involved in buying/selling a home.
YOU must provide clear, definitive information for your client, as well as confirming that the other wheels of the deal (inspection, appraisal, attorney’s/documents etc.) are turning smoothly and staying on course.
As an agent, you know by now the many components required to keep a deal in the air…so don’t drop that ball! Every client represents a path to your next listing!
Having a working knowledge of the above “deal-smashers” will put you in a better position to handle them when they pop up. That means more sales for you, and, by far the greater advantage — a resume bulging with success stories and happy clients!
That paves the way for many more listings, and a very busy you.
Now that you know how to handle anything, you can really impress prospects with your listing presentation!
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Joe Nickelson is a real estate professional dedicated to helping home buyers and sellers achieve their dreams of owning property, and helping real estate agents stop using the sometimes-vicious tactics that weigh on their consciences. He believes that the Smart Agents books will, quite literally, change people’s lives for the better. Check out his full bio here!