Five ways to 'lose the deal
Most buyers and sellers think that once the contract is signed, the deal is done. As coaches, we can tell you that the majority of our work often takes place "after" the contract is signed. There's a lot of follow-up and hand holding, just to make sure the contract actually results in a settlement.
There can be numerous home inspections, everything from a general "look-see" to more specific stuff like radon testing or septic inspections. Financing must be secured and appropriately timed with the settlement date. And, sometimes, non-business aspects of the transaction can come into play.
It's a stressful process. Occasionally, people just freak out and change their minds about the whole thing because there are so many things to keep track of. As a result, there's a minefield of missteps that can lead to the buyer or the seller losing the deal. Here is our list of the top five ways people "blow the deal."
1) Financing: Getting a home loan these days is a bit more difficult than it used to be. Currently, mortgage applications are more detailed. They actually check to make sure you have a job, credit and verifiable income. So, financing commitment isn't the sure thing it used to be.
Additionally, the time it takes to complete the process is much longer than it used to be. Back in the heyday of home selling, we saw loan approvals turned around in just days. Now that the banks actually check on your income and ability to pay, it takes a little more time for them to do their due diligence.
Plus, banks are also taking a harder look at the property to make sure the collateral for their loan is free from defects that might seriously affect the value. Consequently, make sure you build in enough time to get your loan approved for settlement.
2) Home inspections: Virtually every contract has a contingency that allows buyers to inspect the property for significant defects. And if the seller refuses to make repairs, the buyer can opt to withdraw from the contract.
The problem is that buyers frequently forget the word "significant." A home inspection isn't a punch list, and it's not an opportunity for the buyer to try and renegotiate the sales price. For sellers, there's a tendency to get their back up about issues that may be discovered during the inspection. No one wants to be told that their house needs some fixing, and it's understandable that the idea of spending money on something you're selling isn't an enjoyable thing to do.
Contributing to this potpourri of opinion, you also have the agents and home inspectors. In the zeal to show they're representing their client, they can sometimes artificially inflate or deflate a potential home inspection issue. We've seen the sale of homes nearly come apart over things like whether or not the seller is willing to install a 27-cent cover plate on a light switch. So regardless of if you're the buyer or seller, keep things in perspective when it comes to home inspections. It's not worth blowing the whole deal over something that can be fixed in a couple of hours for a moderate amount of money.
3) Emotional overreaction: Building on what can happen with a home inspection; real estate transactions can be very stressful. There's a lot of money involved and you're dealing with someone's most sacred possession - their home. The problem is further exacerbated by current market conditions where many people are upside down on their house and might be on the verge of facing foreclosure. Emotions can run high and they can lead to people making less-than-rational decisions or being somewhat unprofessional.
As with home inspections, this condition isn't just limited to the buyers and sellers. The agents can also get wrapped up in the emotion of the event. We understand that people aren't robots, and how folks "feel" about something is a legitimate part of the mix. But remember to take a deep breath and don't let your emotions get the best of you. Sellers start to think they're getting ripped off, while at the same time buyers are sure they're paying too much. Keep in mind that this is also a business transaction, and everyone's just trying to reach common ground to get the deal done.
4) Not following the contract: The contracts associated with real estate transactions have evolved and grown over the years. It can be annoying that they're so long and complicated; we all wish a handshake was all it would take. But the detail in these documents is there for a reason. By attempting to clearly spell out every aspect of the agreement, it helps avoid (as much as possible) the inevitable misinterpretations that can arise during the process.
We learned this business from years of experience. Whenever we would encounter a problem during the sale, we always ask, "what does it say in the contract?" When there's a conflict, all too frequently buyers, sellers or agents jump into making some independent decision about who's right and who's wrong. In real estate, "he said, she said" doesn't count. The only thing that matters is what's in writing. So, if you find yourself having a difference of opinion as to how something should be done, consult your contract first. In most cases, you'll find the answers right there in black and white.
5) Listening to unqualified advice: When buying or selling a house, it's amazing how much advice people get from good intentioned friends, neighbors and family who usually have no idea what they're talking about. As consultants we constantly hear things like, "my dad says" or "Aunt Margaret sold real estate in Tennessee 20 years ago, and she says" this that and the other thing. It's natural to discuss something important like a home sale with people you know and trust, but remember that when you hire a consultant you do so for their experience and expertise.
The author John Steinbeck once said, "No one wants advice - only corroboration." There's a lot of truth to that. Don't let someone telling you what you might want to hear take precedent over the recommendations of a real estate professional.
Hope this is helpful, Charlie
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125