Deal falling apart? 10 solutions to keep things moving forward

Right now, your listing feeds, and auto emails may be populated with more “back on market” properties and price reductions vs. new listings. When interest rates started to increase sharply from August into September, a lot of this activity started to occur. Back on market was a status that was practically non-existent over the last few years, as buyers had to make offers that had little to no contingencies. 

Flash forward to today, and it is a totally different story. Buyers are feeling uncertain about the market and their mortgage payments, trying to rationalize paying several hundred dollars or more for less of a loan amount than they could have taken out six months ago. The ‘if it bleeds, it leads” headlines in the media about the real estate market contribute to consumer confusion and can create doubt. 

Once a buyer goes under contract, they may start to rethink everything about the transaction. Despite the negotiation taking a few weeks of patient back and forth to make it all come together, the buyer may be getting what is perceived to be “a deal” with a seller giving concessions toward an interest rate buydown and/or closing costs and prepaids. In fact, it is often the truly sweet deals that seem to fall apart due to buyer fears.

While you never know what situation will cross your path, there are a few parts of the real estate transaction that are predictable stress points with regard to financing, the appraisal and inspections. With this in mind, here are 10 ways to keep transactions moving forward. 

Be proactive

Be as proactive as possible. This is not the time to leave any stone unturned or to “deal with it” once the property goes under contract. It might be too late.

For example, if a seller has a major issue like an old roof, plumbing or termites, etc., it is best to address this before the property goes on the market or at least have obtained estimates and have a plan in place to handle it before closing.

There are just certain things that are going to be non-negotiable for buyers who are already feeling squeezed by higher interest rates and have less money to put toward structural repairs. Their ability to obtain insurance may be severely impacted by these kinds of issues. 

Even the “lots of little things” that can be found on inspection can add up in a buyer’s mind, and what is really $1500 in repairs looks like $5000 to a buyer, so it is best to get these taken care of before listing the property. 

If you can get ahead of things that are known, this will help keep the transaction together and avoid the last-minute scramble of trying to run down contractors and estimates, which can be very stressful to obtain as they don’t typically run on the same timeframe as a real estate transaction. A buyer may start looking to the mothership of all information found on Google and start going down a rabbit hole of their own and want to get out of the transaction. 

Have resources on speed dial

A real estate transaction is typically rife with challenges, some completely out of left field from start to finish. You may not know the entire story with the buyer or seller, or the agent representing them isn’t giving the information needed to know that the transaction is on solid footing.

All of a sudden, you find out a divorce decree may have to get signed by a seller, or the buyer has run into a potential snag with their financing. This is when you have to pull out all the stops and provide some resources to help.

You can’t always rely on or expect the other agent to be the miracle worker, even if the issue lies with their side of the transaction. You have to reach out to your real estate attorney, escrow officer or title rep for help. The bottom line is having trusted vendors who can jump in and help “save the deal” with a workable solution are priceless in times like this. 

Lender 911

Oftentimes the buyer goes with a lender they found despite recommendations by their agent, and they don’t understand why that matters until there’s a problem. They were just focused on the lower rate they were quoted.

All of a sudden, the agent can’t get answers, and it is after hours or entering into a weekend, and a financing contingency deadline is fast approaching. The buyer starts to ask their agent questions about their rate lock and specific closing costs, and the agent is just as in the dark as the buyer because contact with the lender has been sparse.

These issues tend to come down at the eleventh hour after the contract has just been signed or the appraisal has been done, and the transaction is due to close in two weeks or so.

Perhaps the lender has limited products or isn’t as skilled at figuring out how the buyer’s financial situation should have been packaged and presented to an underwriter. Maybe the buyer delayed in providing an essential document that is needed to approve their loan, and a fire drill begins. The buyer’s lender has run into a wall, and the transaction seems stuck in limbo.

If a savvy lender comes to the rescue, the deal could be resurrected from life support. But this can’t happen if you don’t have trusted resources you can go to nearly 24/7. 

Creative problem solving

Right now, a seller concession or buydown toward the interest rate can help offset financial fears a buyer starts to have during the transaction. If these weren’t requested upfront or minimal concessions were initially agreed to, sometimes the ante needs to be upped to make the buyer more comfortable to get the deal closed.

While sellers didn’t have to consider these things over the past two years, the pendulum has swung the other way. In our current climate, if the seller doesn’t work with the current buyer in hand, there is no telling when another buyer may come along, nor what price they will be able to negotiate.

Will the seller really want to buy their home back for essentially the additional concession vs. taking a chance as interest rates go even higher?

Credits in lieu of repairs

When you’re coming down to the wire, and there are repair requests that are seemingly minor, trying to get someone to take care of the items can involve far more work in reaching out to every repair person and then some, hoping they respond and there are no guarantees. Most aren’t up for tackling one or two things.

When in doubt, offer a concession towards the buyer’s closing costs or an interest rate buydown because the time, hassle and uncertainty of all can create that much more stress. 

Low appraisal

No one likes these situations, even in the strongest of markets. However, in the real estate market’s best days, appraisal contingencies were thrown by the wayside with hardly a blink of an eye. Appraisal guarantees were more the norm offered by the buyer to show the seller they would pay the price that was agreed to no matter what.

Now, buyers are looking for any reason to pay less or might rethink the deal. In a changing market, renegotiating the price between the parties and meeting halfway could be an option, but if the seller has agreed to give some concessions on the front end, pulling those off the table or reducing them may not be such a good idea.

Another option is to see if a concession could be given to buy down the buyer’s interest rate to offset the payment in lieu of reducing the price to the appraised value. There are a lot of details to work through on this, depending on how the deal was structured with any seller concessions already in place and what the max contribution is allowed, depending on the kind of loan the buyer is doing.

A combination of a rate buydown or price reduction may also be a way to appease all parties. 

Manage expectations

Be candid and upfront about the process with all parties as far as the transaction and what is involved, depending on the property, financing, timelines, etc. Don’t overpromise and underdeliver, especially in today’s market. If something could potentially derail the transaction, it is best to address this upfront vs. waiting to see if it will become an issue.

In today’s market, tying up a home with a buyer for weeks on end can be very costly to a seller if the outcome is uncertain and there is no way to regain the traction that was lost without an aggressive price reduction. In most cases, it takes more than that, including the seller tackling repairs and giving concessions. 

Be hands-on

In today’s market, we don’t have 10 backup offers waiting in the wings if something falls through. It is critically important to be actively engaged with all involved in the transaction from start to finish.

You can’t overcommunicate enough with the buyer or seller as to the process and where they are with things, as well as the lender, inspector, title or escrow company and appraiser (to the extent permitted to ensure/confirm the date they are going to the property and provide them with the appropriate information, etc.).

Don’t assume that something may be in progress or because you haven’t heard anything that “no news is good news.” Often, communication styles vary with all parties in the transaction, and so you may get bits and parts of a story unless you are actively talking to all involved. Ask questions, confirm, and reconfirm every step of the process. 

Odd requests

A changing market is when we might see unusual or what seems like unreasonable requests from buyers. There may be no limits from wanting floors refinished or existing carpet removed and new flooring installed before closing. Buyers may ask for things that are not repairs, but improvements, such as repainting entire rooms instead of spackling holes and leaving them that way.

While it would be easy to brush these requests off as ridiculous in any other market, there may need to be some consideration as to how to accomplish it. There is a balance between a buyer’s seemingly over-the-top request and reality, but where there’s a will, there is usually a way. In today’s market, if these are dismissed, the buyer could walk away altogether. 

Flexibility

It is important for all parties to be flexible, but especially agents. Understand that things may not go according to the contract, and timelines may need to get extended accordingly. Delays may happen. Everyone needs to work together to cooperate in coming up with solutions to address the problem at hand.

Buyers and sellers need to be flexible when determining moving and closing dates and have a plan in place in case those get delayed. All parties may need to compromise in one way or another to make things work. 

While we never know what curveball will be thrown in a real estate transaction, by being proactive, resourceful, creative, communicative and flexible, we can increase our chances of keeping a buyer and seller together to get to the finish line.