Whether you are a new agent or a seasoned professional, you may be experiencing a rise in real estate deals that fall apart. While some losses are inevitable, others are preventable. What can you do to make sure your deals go through instead of fall through? Here are five actions you can take:
- Pay attention to changing markets
Is your town shifting from a seller's market to a buyer's market? If so, you may have more fallout from people who are having trouble keeping jobs or trying to sell homes with little or no equity.
Atlanta, Georgia, for example, has gone from one of the booming cities of the nineties to a buyer's market, says broker/coach Jim Crawford. "Post Sept. 11, we had job losses. A bunch of companies moved into town and then started layoffs, Nortel, AT& T, and Lucent, to name just a few. We found the first ones to be let go were the IT people. They came into town making six figures, and bought a house with nothing down, and now they need to sell with no equity in the house. They want a profit after only being in the house for six months."
Crawford says that getting buyers to the closing table isn't easy, either. When a market shifts to a buyer's market, buyer behavior changes for the worse, sometimes deliberately, sometimes unintentionally.
Advises Crawford, "Look for red flags. If a buyer wants to come in with $500 earnest money when $2000 or $3000 is more appropriate, then that is a red flag."
He says fallouts can be prevented by refusing to put someone in the car who isn't ready to buy.
"So many new agents will put someone in the car and start showing properties," says Crawford, "but a buyer should not get in a car until they have been prequalified by a loan officer, and that can take a day or so. The loan officer can give you the green or red light."
You can't help it if later the prequalified buyer loses a job, but you can prevent the unprepared or uneducated buyer from taking you for a ride.
- Show some healthy respect for Murphy's Law
Murphy's Law can hit you between the eyes when you least expect it. Crawford says he had a sale fall through because the buyer didn't realize that he was obligated to the terms of his apartment lease, which had nine months to go. He backed out right before closing. Crawford's seller was upset that the house had to be put back on the market.
Don't assume anything, cautions Crawford. Anticipate that a first-time buyer might not know what he is doing. "Questions have to be asked of a buyer in this type of market," suggests Crawford. "You have to ask a buyer things like - 'Are you in a lease? When does the lease expire?'
Sellers can throw you curve balls, too. You don't want to get to closing and find out that your seller owes more than she thought on the home. When you sit down with a seller, ask how much is owed on the home and if there are any liens. This way you can find out before you get to the closing table that the seller can't close without your undergoing a commissionectomy.
- Sharpen your intuition
Is the buyer or seller not forthcoming with information on their goals and needs? Are you finding discrepancies between what a buyer says his income in versus what kinds of homes he wants to see or down payments he wants to make? Does your buyer refuse to commit to working with you exclusively?
You could be dealing with a shark, who's out for himself at your expense. This is information you can find out at the first interview. If a person is vague, how does he expect you to hit the mark?
Sometimes people are vague because they have a hidden agenda, like a great aunt with a real estate license who will swoop in after you've done all the work. If you still want to work with someone who clams up, document, document, document.
Others are up front about their goals but not their intentions. Crawford says he won't work with buyers who describe themselves as investors. "They want you to help them find properties, but then they want to cut the agent out and deal directly with the seller," he says.
"The most successful agents rely on their intuition all the time," advises broker/coach Joeann Fossland. "While you can't always logically account for a feeling of foreboding, more often than not, you'll find your "gut" feeling comes to pass. Your intuition moves you to be proactive and take care of a problem or crisis before it happens. Your awareness and attention to your physical and emotional reactions to the people you are working with gives you the advantage of that 6th sense and makes sure you notice warning signs of flakiness or, even, deceit early!"
Fossland explains, "For instance, if your client suddenly gets more reticent or isn't returning calls as quickly, don't wait," she advises, "hoping everything is okay. Instead trust your intuition. Call and ask if they have some worries."
- Dump difficult customers
Do you have a buyer who won't commit to you because she distrusts the real estate industry? Who shops for homes on her own and with other agents as if you're hiding listings from her? Who doesn't know what she really wants? Who balks when you show her exactly what she said she wanted? Who won't get herself prequalified for a loan?
Do you have a seller who wants too much money for his home? Who refuses to take your advice on what to do to make the home more marketable? Who thinks it is your fault when the home doesn't sell? Who constantly threatens you with giving the listing to your competition if you don't perform?
Reasonable people have reasonable expectations and back those expectations up with reasonable behavior.
Again, most people reveal their attitudes in the first interview.
"No other industry works hours and hours for free while expending their own funds on the OFF chance that they might make a sale," says Florida broker Marcy Brennan.
If your buyer doesn't trust you, don't waste your time. If your seller seems unreasonable during the listing presentation, don't take the listing. These are people you are never going to make happy no matter what you do, and spending time trying to please them is only going to add stress to your life and make you less available to clients who are not only pleasant to work with, but actually have a shot at closing.
Buyers and sellers have trained the real estate industry, which is often desperate to work with simply anyone, to put up with unconscionable behavior. Why? Let your competitor go broke trying to please people who can't be pleased.
Sure, you'll find out later that Ms. Indecision closed a house with your competitor, but how many more buyers and sellers did you help while she ran your competitor ragged?
- Give your clients a reality check
Is your buyer unrealistic about how much home he can afford, or what the market has to offer? Is your seller counting on her home to fund her retirement even though she hasn't made any improvements for 30 years?
Working with committed, but unrealistic buyers and sellers can be as disastrous as clients who are uncooperative or untruthful.
"Give them a reality check up front, take off the rose-colored glasses and deal with reality," says Brennan. "Brokers really don't tell clients the truth."
The truth saves time and aggravation. If sellers don't want to hear the truth from you, they certainly won't want to hear it from buyers.
