Bernice Ross

If you watch the real estate reality TV shows, it comes as no surprise that the public thinks agents have it easy – put up a yard sign, take some photos, hold an open house, get an offer and collect a big commission check.

In fact, even new agents are surprised to find that putting the deal together is just the beginning. Up to 90 percent of the work is getting the transaction closed. This is where your ability to defuse deal killers will determine whether or not you will get paid.

Given today’s limited inventory, higher interest rates, soaring insurance quotes, unexpected HOA issues and fees, plus stricter mortgage underwriting, closing transactions is harder than ever. If your buyers are stretching to get into the house and they see an inspection report or insurance quote that scares them, they are more likely to walk away than ever.

Moreover, if you neglected to tell your buyers that the closing costs are in addition to their down payment, that can be enough to kill the deal because they simply may not have the money.

There Is No ‘100 Percent House’

When I was executive director of training for Jon Douglas Company in Los Angeles, Jack Douglas would always tell our new agents, “There’s no such thing as a 100 percent house.” Since that time, I’ve also learned, “There’s no such thing as a 100 percent spouse – you just have to decide which set of warts you want to live with.”

My buyers would always get a good laugh out of that analogy because it helped them understand neither houses or spouses are perfect.

To help your buyers understand what is and is not important in their inspection report, categorize each item the inspector cites as:

• Major issue, needs attention now
• Normal maintenance
• Cosmetic or expected with age

Good examples of the first: a roof leak, termite damage or a plumbing issue. The second? Changing HVAC filters or painting. The third: older, but functional appliances, settling cracks and creaky floors.

This single step can prevent a large percentage of post-inspection blow-ups as well as helping your buyers decide what’s most important to ask for on the inspection report.

The JDCo policy was that we asked for a credit for the inspection items so the buyer can oversee the work. If there turned out to be an issue with the vendor who did the work, it’s between them and your buyer who hired them.

Appraisal Surprises

When appraisals come in low, buyers often assume that they are overpaying. In this case, the best defense is a good offense.

Before you write the offer, do a deep dive into the current predicted values on the various portals as well as your CMA. Then explain that whether a portal, the appraiser or even your CMA that’s estimating a home’s worth, these are all opinions of value.

Warn them that appraisals do come in low and that you are giving all your latest pricing information to the appraiser (if at all possible). Make sure that your buyer is the one who decides the offering price based upon the current comparable sales.

Second, if you’re representing the buyer, having them work with a mortgage broker who can shop other companies for loans, is normally a better choice than applying at a single lender. In my own case, I had private banking with a major bank, and my mortgage broker still got a much better price than my private banker did. Having this option has saved numerous deals for me over the years.

Be Prepared to Renegotiate

And remember, buyer’s remorse is normal. The best course of action is to tell your buyers up front that it is normal to second-guess whether they’re doing the right thing by buying now.

When problems like the ones above surface, you can renegotiate, but it doesn’t necessarily mean you have to renegotiate the price. For example, could the sellers leave the big screen TV or the patio furniture rather than taking it with them? Would they be willing to pay for a home warranty for the buyers?

If it’s necessary to revisit the price and the seller is unwilling to reduce it, ask, “What are the quality of your alternatives if you don’t sell now?” That question often taps into the seller’s pain and their motivation for moving.

Virtually every deal comes with deal killers along the way. But you and your buyers should remember: About 95 percent of all deals have issues that can prevent them from closing, but 90 percent of the time, these deals will close if you work closely with the seller and their agent.

Bernice Ross is a nationally syndicated columnist, author, trainer and speaker on real estate topics. She can be reached at bernice@realestatecoach.com.