Having worked with Real Estate Agents for over 15 years, our attorneys have encountered just about every closing problem imaginable. Missing heirs, bad appraisals, qualification issues (for the buyer or the property). Getting a deal together, and keeping it together, is crucial for everyone involved in a closing. Lenders, agents, and attorneys all have to do their part to make sure everything goes according to plan. As an Agent, you have a lot of power to keep things on track. As you work your deals, keep the following in mind, and hopefully you can help avoid hiccups late into a deal.
KNOW YOUR PROPERTY
As the listing agent, you need to understand the product you are selling. Look at it. In person. Go there. What are the necessary repairs, and what are the aspirational repairs? If you’re not sure, find out. If you’re the listing agent, you should know as much as possible. Get a list of recent repairs/renovations from the seller. Find out the school district, the HOA info, the utility companies, etc… If you’re the buyer’s agent, find out as much information as you can (even if the listing agent doesn’t know) as soon as you can. Are there any disqualifying issues/code violations that will have to be repaired prior to a ban being willing to loan against the property? Is the property in an area that would grant access to different financing options such as Rural Development loans? If you don’t know, find out.
KNOW YOUR BUYER:
Is your buyer paying cash or taking out a loan? If they need a loan, how much do they need, and what is the likelihood that they can get it? Putting your buyer in a position where they have overextended themselves is a recipe for an unhappy customer without the ability (or willingness) to refer work down the road. Additionally, making offers based on over-optimism of your buyer’s creditworthiness can lead to loans falling through prior to closing. There is a difference in a pre-approval, and a pre-qualification. Make sure you know what you’re working with.
Are they buying individually, or on behalf of a company or group? Do they have authority to speak for/contract for the group? Lenders may want to vet all members of a company or group prior to lending. If one member has bankruptcy in their history, that may sour an otherwise workable deal. Know who they players are, and ask questions along the way. Will a power of attorney be necessary? How about a corporate resolution? Lenders and closing attorneys can have these documents ready prior to closing, if they know the “structure” of the deal ahead of time. Otherwise, surprises on closing day can lead to lengthy closings, or worse, delayed closings.
Will the buyer be living in the property, or purchasing it as an investment? Make sure they understand the different loan options depending on the eventual use of the property. If you’re unfamiliar, help your buyer connect with a loan officer who can help them understand their options.
Is it their first time? Give the buyer a preview of what to expect; costs, document gathering, realistic timelines, etc… Someone who has purchased a home, but is purchasing their first investment is entering new territory, and should be treated accordingly.
KNOW YOUR SELLER
Who owns the property? We’re constantly surprised to find that a listing agent may not know who actually owns a property. Is it in an estate? Is it being sold by someone who has gone through a divorce? Is it being held in trust? If not addressed ahead of time, the answers to these questions can delay a closing (sometimes by months). Depending on who is the owner, who is actually signing? Are they the owner? An Executor of an estate or a Trustee? Do they have the authority to do so, and the documentation to show that authority? Is a power of attorney necessary? Prior to listing the property, spend the extra two minutes with the seller to ask them:
- Are you the sole owner? Who’s name is actually on the deed to the property?
If there are other parties involved (LLC members, heirs, etc…), get their contact information, and let the closing attorney know as soon as possible. That way, estate issues, powers of attorney, or other responsive documents can be prepared ahead of time, preventing any delay of closing once a contract is signed.
GOVERN THE CLIENT’S EXPECTATIONS
Over-delivering as ALWAYS better than over-promising. Keep your client’s expectations reasonable and conservative, and if you manage to “over-deliver” for them, then congratulations; you look like a hero. Don’t over-hype the value of a property. If you can’t realistically sell a property above a certain price point, don’t lead the seller to believe otherwise just to get the listing. Ease your customer’s mind by not allowing them to be surprised. Guide your buyers through the loan process. Let them know that there will be lots of documents to gather and submit (maybe more than once). As the process unfolds, and your predictions/warnings happen as expected, your credibility grows, and your client’s trust in you increases. Maintain a network of credible contractors, appraisers, etc… who can advise on likely repair costs, should the need arise. Rely on these people to help answer questions when you encounter unfamiliar territory.
BE A PART OF THE TEAM
This not an adversarial process. Everyone wants the deal to close, and everyone wants to impress the customers so that the referrals keep coming in. Be an asset that helps everyone look good. If submitting a document to the closing attorney will take you 15 minutes, but would take the other agent or the lender an hour, submit it to the attorney yourself, even if it’s “not your job.” Be timely with contract amendment or supplements. Be ready for requests for information from multiple parties. Be ready, willing, and able to provide as much information as possible to the buyer, the seller, their agents, the lender, and the closing attorney. Don’t rely on others to do your leg work for you, but be ready to someone else’s legwork for them. We know; that’s not fair. That’s okay, because this isn’t about “fair.” It’s about getting the deal closed as quickly as possible, as cleanly as possible, and as painlessly as possible for the clients (not for you).
Let your sellers see you hustling for them. Don’t let the other agent, the lender, and the attorney be the only impression your seller has of the Real Estate process. Help guide them. Help them stay ahead of the process, rather than simply reacting to it. Let them feel comfortable and confident having chosen you as their agent.
Help the other players (the lenders, attorneys, etc….) make you look good. Everyone wants the deal to close. Everyone wants the referrals that come from happy buyers and sellers.