Top 10 Deal Killers & How to Avoid Them

As a real estate agent, you already know that finding a buyer for your client’s home or helping a client find a home to purchase is not the most difficult hurdle to clear. Finding interested parties can feel trivial compared to the effort and skill required to shepherd a deal through to closing.

The following Top 10 Deal Killers are the realtor’s natural enemies. Today, we’re going to share the steps savvy realtors can take to head off these disasters.

1.) Undisclosed Debts and New Financial Obligations

Whether the buyer has concealed previously-existing debts or has taken out a new loan during the home-buying process, the discovery of additional financial burdens has the potential to tank a deal.

To prevent this complication, advise your buyer to disclose their total debt from the beginning of their loan approval process, and warn them against making any big-ticket purchases until their deal has closed.

2.) Poor Budgeting and Inadequate Preparation

It’s common for buyers to be unaware that there are considerable expenses that will be tacked on in addition to closing costs. To prevent a deal falling through, advise buyers to set aside an additional $3,000 to $5,000 to cover costs like attorney fees, inspection fees, and lender fees. While you will do your best to negotiate the most advantageous deal for your client, it’s unlikely that a seller in today’s market will be motivated to help cover these costs.

3.) Making the Wrong Repairs and Improvements

Sometimes sellers are eager to sell and want to make last-minute repairs to boost the marketability of their home. While repairs are a great way to attract buyers, it’s important that sellers make the right repairs.

Rather than wasting cash on lighting fixtures or other superficial hardware upgrades, advise your client to invest in ensuring that their home’s electrical is up to code, that smoke detectors and CO2 detectors are new and placed correctly, and that the roof passes inspection. Buyers value practical repairs far more than cosmetic upgrades.

4.) Delayed Loan Approval

It’s always good to get preapproved for a mortgage many months before the intended purchase date. Once your client has placed an offer on a home, another 2 – 3 weeks will pass before the underwriter will rubber-stamp the transaction, during which they’ll be asked to answer a long list of tedious questions.

Your client will likely be asked to present personal documents repeatedly throughout the process. They won’t be asked for everything at once in an orderly fashion; rather, a confusing trickle of requests will interrupt the flow of your client’s days.

Take the time to tell your client what to expect. Having a knowledgeable resource to calm them down and keep them focused could be all they need to stick it out.

5.) Low Appraisals

There is a common belief that it’s ideal for a buyer to have their potential home appraised below the agreed-upon sale price, but reality isn’t that simple. Because so many sellers today can’t afford to accept below asking for their homes, they may just pull the plug on the sale if they won’t make enough money.

An appraisal that’s only a bit too low is easier to overcome; a seller might be able to negotiate a few percentage points. However, if an appraisal is 5% (or more) lower than expected, most sellers can’t get behind this new number, and buyers won’t buy a house that isn’t a good deal for the current market.

6.) Misguided Negotiating Tactics

When a client ignores their agent’s advice and tries to strong-arm the deal, they aren’t likely to be successful. Even sellers who are underwater on their mortgages want to feel like they’re making a smart move by selling.

Negotiating needs to be focused on making a compelling offer. While each party will likely need to be a bit flexible to accommodate the other, both parties need to be happy with the deal before it will progress smoothly. Mutual cooperation and outstanding communication are the hallmarks of a successful real estate deal.

7.) Non-Disclosure of Known Property Condition Issues

When a homeowner has neglected their property or is selling a home that needs repairs, it is crucial that every known facet of the home’s condition be revealed to prospective buyers. When a home is found to have dry rot, termites, shoddy electrical systems, peeling exterior paint, or deteriorating roofing, buyers feel like they cannot and should not trust the seller to act in good faith.

In order to attract a buyer who is interested in making the necessary repairs, the home must be priced and marketed accordingly.

8.) Final Walk-Through Drama

This can happen to buyers and sellers alike. Whether a repair wasn’t completed to satisfaction or new issues are discovered during the walk-through, it’s vital that the seller and buyer work together in good faith to correct the issue. Any hint of hostility or resentment here can tank a deal quickly.

Emotions are running high on both sides at this stage, so take some time with your client before the walkthrough and discuss strategies for managing unexpected problems that may be revealed.

9.) Natural Disasters and Sudden Death

Fires, floods, hurricanes, and tornadoes can all destroy a deal despite the best efforts and intentions of everyone involved. The loss of the life of one or more parties involved is likewise obviously the end of a deal. These complications are the most difficult to face.

10.) Changes in Government Funding

This is something no involved party can control. When the government changes the legislation governing FHA loans, management of student debt, or takes other sudden actions (i.e. shutdowns), buyers and sellers alike can be so affected that they are unable to pursue the transaction further.

This deal killer is one that no one can prepare for, but if you work with your client with compassion and understanding, they’ll be much more likely to reach out to you directly in the future when they are able to pursue their real estate dreams.

Parks Realty