In recent months, home sales plunged more than 15% nationwide, according to a Redfin analysis. If you’re a Phoenix, Las Vegas, or Tampa agent, you’re undoubtedly familiar with this, as these cities have the highest number of unfinished real estate deals.
Thank you for reading this post, don't forget to subscribe!According to a survey by Cinch Home Services, the top 5 reasons for these train derailments include:
- buyer gone
- The buyer’s mortgage application was denied
- seller backed out
- home inspection issues
- home not appraised
Don’t wait for your deals to break. Being proactive rather than reactive will help avoid some of the more common problems.
1. Vet the buyer
According to the aforementioned Cinch survey, 42% of derailed deals in the recent month resulted from a declined loan application.
Buyers’ agents should thoroughly vet their clients to ensure that they qualify for the loan and are prepared to complete the deal financially.
A Boulder, Colorado agent on Realtor.com suggests that the listing agent may consider requesting a “… most recent pre-approval letter from the lender written within the last 30 days.”
Additionally, make sure the buyer has a lock in on the interest rate. According to Ali Wolf, chief economist at zondahome.com, “Buyers who have a mortgage rate lock in place are more likely to turn down purchases that still require a rate lock.”
Jason Gelios, author of “How to Think Like a Realtor,” offers some signs for a listing agent that may indicate the buyer isn’t as strong as you might hope. This includes:
- a small down payment
- Request for credits or discounts from the seller
- Pre-approval letter from an unrecognized lender
2. Tighten those contingency deadlines
Not too long ago, we were surrounded by a hot, hot, hot sellers’ market, so much so that the word ‘casualty’ became almost obsolete.
“Now, the supply and demand balance has shifted,” Eli J reminds us at Yale Money.com. “Buyers have leverage, ushering in a new era of contingency-filled deals.”
A Redfin agent in Las Vegas warns, “Homebuyers will agree to buy and inspect a home now, and then come back because they’ve found another home they love more.”
Before accepting a contract, advise your client to counter it with a request to reduce any excessively long contingency timelines. The less time buyers have to shop for a second home while under contract on your listing, the better.
3. Consider a Pre-Sale Home Inspection
About 40% of failed real estate deals can be blamed on home inspection results.
We understand: Many agents are hesitant to recommend pre-listing home inspections to their clients. Some say it is because it introduces additional disclosed items. Whatever may be the reason, the truth of the house will come out in the inspection report of the buyers.
Be proactive so that your client has a complete picture of what’s going on when the buyer’s inspection results come in. This allows your customer to fix or replace anything that you’re sure will be a problem for the buyer.
At the very least, you’ll have time to strategize how to handle the conversation if there is a problem at home.
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