In this hot real estate market, we are seeing some newbies and less-experienced agents who are trying to keep up with the fast-paced changes. The financing aspect of the purchase can lead to many of the problems that we encounter. It is very rare to see 0% down loans these days, and we most commonly encounter 10%+ on financing. Lending Tree revealed this past winter that the average down-payment on single family homes was 17.5%. All else being equal, a strong down-payment gives the sellers confidence that the buyers have the financial solvency to complete their purchase. However, the down-payment amount is a tertiary criteria when judging the overall offer package, and it’s important to understand how the various terms will benefit or harm a seller. Two years ago, we had a client submit an offer with a 10% down payment, (he could only do 10% since he needed the cash to repair the house), but the seller decided to take an offer with 20% down instead. The silly thing is that our client offered $4500 more and could close in less than 3 weeks. The seller lost out on $4500 – or more – and whatever the proration of expenses was between our 19 day closing and their buyers’ 35 day closing. More recently, we got into a situation where the listing agent tried to assert his authority and became overly concerned about the buyers’ ability to complete their financing. One thing led to another and the buyers decided to retract their offer and go elsewhere. The agent baits us into a conversation about how he wasn’t going to recommend our offer to his sellers anyway, to which we responded (a) great, tell them to go talk to the ZERO other offers you currently have in hand, (b) you should call the lender and find out about how well-qualified the buyers are before ASSUMING you know everything about how mortgages and timelines work and (c) your overstepping lost your clients a solid buyer with a faster closing than the buyer you guys eventually sold to. Our buyers ended up closing in 22 days on another property and everything went smoothly just as we said it would. Congrats dude, we hope the experience made you feel extra boss. Let’s not confuse the forest from the trees, people! Our job as agents is to facilitate for our clients and to best serve their interests, not to create obstacles on the way to helping them reach their objectives. We have to look out for the yellow and red flags along the way, but we also need to clearly determine and convey the severity of those warning signs. Due diligence is essential – road blocks are not.
© Rich Tao Real Estate - since 2003
