August 13th, 2012 at 7:08 pm
First, when representing a buyer, one of our agents always tells the client not to use or open any new credit after an escrow is opened. That new credit may negatively affect the buyer’s chance to get a loan and therefore make your deal harder to close. This advice was emphasized to me when later in the week I got a call from a buyer’s agent who had this very problem. After opening an escrow with our agent, the buyer then went out and bought a new car. Of course, that purchase was financed and, when the mortgage lender found out about the car loan, problems arose. The only way the buyer could qualify for his new mortgage was to pay off the car loan immediately and close out that new credit account. As a result, he had to borrow $12,000 from family, pay off the car and then close his real estate deal. So please talk to your buyers about this. They don’t know about these problems without your help.
Next, when representing a seller, another agent shared that they always tell the seller that no matter what the contract says, close of escrow is a “floating” or “flexible” date and often does not occur when scheduled. By having this conversation, our agent prevents a real problem of disappointed expectations, where the seller thinks the closing date is a guarantee, plans around it and then is stuck when there is a delay. Again, I recently saw this in concrete terms, where a seller demanded money from us for a late closing. This seller kept telling us that “the contract says what the contract says,” and therefore the buyer was in breach. He wouldn’t listen to anything we had to say. So to avoid the problem, and close the deal, we had to compromise on his demands. As a result, please tell your sellers that, while you will do everything possible to close on time, it sometimes doesn’t happen. Tell them that loans are hard to get and take a long time. Tell them that repairs may take longer than expected, or that the buyer could get cold feet and even breach the contract. Make sure they understand that is why the buyer has contingencies, because nothing is definite. By counseling the seller in this way, you will prepare them for all eventualities and will not have to deal with the disappointment if something happens.
In short, by counseling on these two issues, you can take easy steps to avoid problems with your deal and client. And, of course, we know that is your main goal.
As always, let us know if you have any questions.
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