In today’s market, 25 percent of all pending home sales never close. The buyer and seller have successfully negotiated the pricing and terms for the home purchase and sale, but somewhere before completion of the sale, the transaction falls apart.
It is disheartening and costly to market the home, find an interested party, and successfully negotiate amenable terms, only to have the sale come undone. Many of these failed sales could have been foreseen, while other terminated transactions could have been salvaged with the right counsel.
In some cases, the sale fails due to an unforeseen circumstance, such as an unexpected job change or a death in the family. More often, the sale fails because of unspoken assumptions and unnamed expectations between the buyer and the seller. For example, the seller may assume that the buyer had done his homework on the financing – what would be required of them in order to be successful in qualifying and procuring the necessary loan. Maybe the buyer assumes that the seller should return the home to like new condition at the seller’s expense, prior to close of escrow. After all, the buyer is paying top dollar for the home. In both cases, the assumptions and expectations may result in insurmountable hurdles well into the transaction.
Traditionally, the dialogue begins with a written offer from the potential buyer to the seller. The seller will re view the proposal, accept it as written, reject it and submit a counter-offer, or simply reject the offer.
When drafting the offer and counter-offers, both buyer and seller are full of optimism. Often, the sales agreement is completed with the assumption that everything will go as planned. Very little attention or process is provided in the contract to address how the transaction will proceed in the event things do not go as planned.
Because Realtors are not attorneys, they cannot draft contracts. There fore, we work from forms that have been drafted by real estate attorneys with exhaustive input from real estate practitioners. By working with the right Realtor, clients benefit from their agent’s experience and these comprehensive forms.
Immediately after an offer has been accepted, the due diligence period begins. Customarily, the buyer will order inspections to be done by an inspector of the buyer’s choice. Within two weeks, those inspections will be completed and reviewed by the buyer. The offer is usually written with the purchase of the home in as-is condition. However, this is before the buyer fully understands the true condition of the home. Because the buyer may terminate the offer if they do not like what the property inspectors find. buyers have an opportunity to ask the seller to address needed repairs.
This conversation can become strained as the buyer requests repairs on the home the seller has been living in without a problem. When coaching buyers, it is essential the buyer acknowledges that the home is a
‘used’ home. When asking for repairs the buyer must consider whether any reasonable buyer would make the same request.
When coaching sellers, the conversation is similar. If their buyer makes a repair request, the seller must consider that if this sale fails, will the next buyer make the same repair request? If the repair is reasonable, it is better to address the concern and proceed with the transaction.
Thus, the transaction often hinges upon the parties getting the information that they need in order to understand the scope and cost of the repair. The appropriate licensed trade person will help the parties understand the appropriate approach to remediating the challenge.
Additional challenges that might stand between the buyer and seller and a closed sale include but are not limited to; encumbrances overshadowing the title, low appraisals, and completing necessary repairs within the time frames available in the contract Finding a Realtor who can navigate these challenges will empower buyers and sellers to get over these hurdles.
Having served as a regional manager historically, I have reviewed hundreds of real estate contracts, and have mediated the conflicts arising from poorly written offers. I returned to sales in 2012 better prepared to counsel sellers and problem-solve when the need arises. The level of expertise applied by the Realtor overseeing the contract will greatly influence the likelihood of the transaction’s success.