If you think the game’s over when you accept a signed contract from a buyer, think again.
Realty transactions don’t end until you get to the closing table and all the papers are signed, sealed and delivered. In the 30 to 60 days between contract and settlement, anything can go haywire, and it often does. Sometimes the contract never closes.
There are no specific, recent statistics on the percentage of contracts that don’t close. The National Association of Realtors stopped asking its members questions to determine how many agents had dealt with failed transactions. But in a 2012 NAR member survey, one in three members said they had a deal that fell through.
“Bottom line is, we have too many transactions not making it to the closing table,” said Lynn Madison of Lynn Madison Seminars, a training and development company based in Schaumburg, Illinois.
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There’s a litany of reasons deals fall through. The buyers can’t secure financing; the inspection uncovers some hidden defect the buyer just cannot accept; maybe the buyer simply gets scared and changes their mind.
Usually, though, contracts fall apart because someone along the real estate food chain fails to do his or her job correctly – or completely, said Adorna Carroll of Dynamic Directions, a real estate training firm in Berlin, Connecticut.
Carroll said that having a license does not guarantee the intelligence of your agent, the other guy’s agent or any of the other professionals you deal with. Some are as “dumb as a bag of hammers,” Carroll said at a NAR convention a couple of years back. “They don’t know what they don’t know.”
Sometimes, the educator said, they let things fall through the cracks, they let their egos get in the way of good judgment, they don’t play well with others or they simply expect someone else do their work for them.
This is not to besmirch the good name of hardworking realty professionals, just to warn buyers and sellers alike to stay on their toes. Follow up with the various professionals to be sure they do their jobs and do them on time – lest the contract lapse.
Take the listing agent. Has the agent explained the process to you, completely and to your full understanding? There are lots of events that have to fall into place once you accept the contract.
Did the agent take the time to explain the differences between an appraisal and an inspection? The differences are huge. Did he or she attach a list of non-realty, personal property items that come with the house? If so, that was an error: Lenders don’t want it and will ask that it be removed, which could delay the deal.
Ditto a copy of the inspection report: unnecessary.
It is your job as the buyer or seller to go over every word in the listing and contract to make sure the address is correct, the square footage is accurate and the condition of the property is not misrepresented. And you must make sure that your agent has his or her eyes on all the moving parts.
“Our job is not done when we get a contract,” Madison reminded her audience at the NAR meeting. “As a matter of fact, it has only just begun.”
“Every team needs a quarterback, and you’re it,” she said. “We have the ball and it’s our job to get it in the end zone.”
It’s also smart to check the buyer’s agent’s work to make sure the agreed-upon price is written clearly. The same goes for all riders or anything that has to be written by hand on a preprinted document.
The contract is a legal document, and agents, as skilled as they might be, are not attorneys. The last thing you want is to have a disagreement later over what the buyer meant by this language or that phrase.
Sometimes, according to Carroll, buyer’s agents don’t have a good team of professionals working with them: personnel who chase down missing legal papers, for example, or keep the client abreast of what’s going on with the sale. That means your agent will have to do double duty, or again, the deal could fail.
Remember, there are various moving parts in every transaction: the home inspection, the appraisal, the bank, the lender’s underwriter, the title company and the settlement agent. Any one of them can forget, or lose, an important document. Even your lawyer can drop the ball.
Bottom line: Your agent has to know how to do his or her job, as well as the jobs of everyone else who is a part of your transaction.