The Boeglin Team successfully closed 5 transactions in January, 2012, along with 2 postponements that should close in the coming weeks. However, I grimace when I hear a Realtor (or anyone else) equate a negotiated “contract” as a “sale”. In our experience in the real estate business, not all written contracts signed by buyers and sellers result in sales. The contract is just one important step in the process of selling a home. I agree that it is important for a Realtor to maintain a positive attitude that the contract will survive the obstacles to closing. It is also important to have a clear and realistic assessment of the process. A competent, experienced Realtor can usually manage a successful transition from contract to closing, but sometimes “stuff” happens that can potentially blow up the deal. What can happen? Anything! Here is some of the “stuff” we have experienced in recent transactions: o A blue chip buyer with a perfect credit rating needed a mortgage on a condo she was buying. She had a substantial down payment, and received assurances from her Indiana bank that they could provide her with the small mortgage she needed. Shortly before closing, the bank decided they couldn’t make the loan because less than 51% of the owners in the condominium association were full time residents. As the deal teetered on the brink, our Sunbelt mortgage broker, Jeff Robinson, came to the rescue with last minute financing. We were able to successfully close the transaction. In essence, a successful Realtor must wear many hats while selling a home. It begins with the marketing of the home; then transitions into negotiating the contract; and finally serves as a problem solver/mediator to overcome the obstacles to closing.
o Frequently, sales of Florida homes include furnishings or other personal property. It is absolutely mind-boggling when a misunderstanding about trivial items of personal property can create animosity between buyers and sellers–sometimes preventing the sale from proceeding. Kind of reminds me of my days as a family mediator, when disagreement over who gets which television set could lead to a contested divorce. We go to great lengths to have written inventories prepared of included and/or excluded items of personal property, in order to minimize misunderstandings.
o When mortgage financing is involved, the purchase is contingent on a bank appraisal. Sometimes the appraiser is sent in from another part of Florida, and has no sense of the local market. Appraisers are under pressure from banks not to “over-appraise” the value of the home that will become collateral for their loan. If the appraisal comes in too low, the deal is either “off” or the parties may agree to a lower sale price. As experienced Realtors, we make it a point to offer appropriate comparisons for the appraiser to use in determining the value of the subject home.
o Inspection issues can be one of the biggest obstacles to closing. Recently, the inspection report on a meticulously maintained home reported numerous problems. The homeowner, who had lived there for 17 years and had maintained the property, told me: “After reading the 30 page inspection report, I wouldn’t buy this house!” Fortunately, experienced Realtors and realistic buyers are enabling this transaction to move forward.
o Condominium and Homeowners Associations are struggling with delinquencies which can cause difficulties in mortgage financing. Too many distress sales in the neighborhood can be a turnoff to a bank considering a mortgage loan to an excellent credit risk.
o Distress sales have their own unique obstacles to a successful closing. Short sales, of course, must include the lien holders in the negotiations that follow a contract. This can involve significant time delays and frustrations to buyers and sellers. Even foreclosures, which normally close fairly smoothly, can be complicated by delinquent dues, code violations, and title issues.