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16% of transactions tank in June, finger pointing going wild

One big industry of professionals

Builders, inspectors, lenders, underwriters, lawyers, investors, title reps, appraisers, and of course agents, we are all part of the Real Estate industry. While we certainly aren’t required to like every person we come into contact with during the course of doing business, or even on online, it’s generally good sense to not be a jerk to those with whom we are working. As difficult as it may be, it’s just as important to not take things personally if they go wrong. We are one big industry of professionals. It’s time to behave like it.

Critical jobs to complete

Each person in a transaction has critical jobs to complete, and all of them are for the benefit of our mutual clients. If there were to be such a thing as a normal or typical transaction these days, problems can still arise. Anything from trouble getting financing to an issue with the appraisal, to defects being found during the home inspection are likely to cause some agonizing moments for all those involved in any transaction. 

Determining the good, bad, ugly, and reporting back, is often what members of our industry are required to do as part of their jobs.  When we break it down, it’s that basic. Think of the title search, the credit report and underwriting, the appraisal, the pest inspection, or the home inspection, all of these use facts, based on researchable data, put into reports, and delivered to the requesting party. 

None of these things are completed to be “deal killers.” They are done to protect our mutual clients’ best interests. We shouldn’t be going around shooting the messenger, so to speak, we should be thanking whoever found the issues, and working towards correcting whatever problem has been found.  In the field we are seeing the blame going wild and it does nothing productive for our industry, or for our customers.

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16% of transactions tanked

It was reported that in June, 16% of transactions were tanked, and no one knows the exact reason. There has been some speculation that it was due to financing, appraisals, or buyers changing their minds altogether and just wanting to wait to purchase. 

While lending requirements have yet to change drastically, and in fact, legislation has already been introduced to extend the loan limits that are set to expire in October, this is an unlikely contributing factor, as some have claimed. Some have said appraisals are coming in low, or below market value. Value is determined by similar sales, and active listings in the immediate area, to put it simply. If the value is X, then that’s what it is, the number isn’t made up by the appraiser, it isn’t “low” or “high.” 

When a buyer doesn’t purchase, it could be for any number of reasons.  They may not be ready to purchase, they may have their own home to sell, or their circumstances may have changed. The same is true for sellers. There could have been a lot of short sales or REOs that failed. A seller could have been expecting a job transfer that now, isn’t coming through.  Any number of reasons could be cause for the spike in failed transactions in June.  Before we start throwing blame around, let’s know the reasons behind what happened.

Calling out professionals

When we start calling out professionals in our industry, either individually, or as a group, over a potentially botched transaction, just for doing what is required of them, we are merely acting like children peeing in the pool, and this goes both ways. As agents, we simply cannot do everything, it just isn’t possible. Clients need to be taken care of, and other members of our industry ensure that can be done by doing what they have been trained to do. We should be mindful and respectful of others in the Real Estate industry and the duties they perform, instead of being snarky, and double so if trouble occurs during a deal.

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Written By

Katie Cosner, occasionally known as Kathleen, or KT, is a Realtor® with Cutler Real Estate and is active in her local Board of Realtors® on the Equal Opportunity & Professional Development Committee. She has been floating around online for a number of years, and is on facebook as well as twitter. While Katie has a few hardcore beliefs, three in the Real Estate World to live and die by are; education, ethics, and the law - insert random quote from “A Few Good Men” here. Katie is also an avid Cleveland Indians fan, which really explains quite a bit of her… quirks.

22 Comments

22 Comments

  1. Matt Thomson

    July 25, 2011 at 3:26 pm

    Katie, love the premise of this article, and I'd love to hear your thoughts on this question. You write, "When we start calling out professionals in our industry, either individually, or as a group, over a potentially botched transaction, just for doing what is required of them…"
    When, if ever, and how if so, do you recommend calling out professionals who aren't doing what is required of them?
    If an appraiser fails to take into account special features of a property (in my area view and waterfront are major considerations), or a lender fails to meet time lines (I had a lender tell me 2 weeks ago they "forgot" to order the appraisal on a file that was tabled for a while), or another agent fails to get necessary paperwork (maybe they failed to get the septic pumped).
    Is it appropriate to call out in those situations? If so, what's your recommended method to keep it professional?

    • Kathleen Cosner

      July 25, 2011 at 4:22 pm

      Matt, it is absolutely appropriate to call people out, when, or if something gets screwed to the wall, and is blatently out of whack.

      When someone just completely slacked off, or totally messed up for instance – pick the profession. Getting angry privately is fine, but doesn't resolve anything.

      Usually, by talking with two or three *other* people in that same profession to get their opinion on whater the issue is first, then by going *back* to whoever messed up, and saying; listen, this is the advice these other two gave, what do you think about it, can we get it resolved by 5, or the end of the week? This is a pretty good way to go.

  2. Ruthmarie Hicks

    July 25, 2011 at 9:48 pm

    Ok – I'll put in my $0.02 – None of my contracts tanked in Q2 – because I didn't HAVE any contracts. I am mostly a buyers agent who is now rethinking that strategy. Could it be that what we are seeing is in part the extension of the "cold feet" I'm getting with my current crop of buyers (Lookie lous)? I am currently working with about 7 so-called buyers. I've had 12 so far this year and NOT ONE would sign a contract. I generally have a close rate of about 70% under normal circumstances. These were qualified, preapproved, supposedly motivated buyers. I've presented offers literally dripping in goo they are so sweet and buyers turn up their noses and demand more, more, MORE!!!! It's bordering on insanity.

    The buyers that got close to contract tended to suddenly go nuts trying to throw in one monkey wrench after another. I would fix one problem – and think "Phew!! That was close! SOLVED!!" Then they would come up with something else. I'd fix that – and something else would pop up. Over and over I would try and nail down a deal and each time it was like nailing jello to the wall. Couldn't be done. So could buyers be trying to find a way out post-contract as well?? Harder to do – but still possible…

    • Kathleen Cosner

      July 26, 2011 at 6:19 am

      This is an excellent point Ruthmarie, and thank you for bringing it up! Are people using things as "excuses" just not to buy, for whatever reason? Inman had a super good article yesterday on landlords statigic defaulting, if I was still renting, just the *possibility* of that happening would be enough to motivate me to buy right now!

  3. Ruthmarie Hicks

    July 26, 2011 at 2:28 pm

    Thanks Kathleen – I'm not saying its the entire reason. I would bet that lending still has a great deal to do with it. But I have had way too many cases of "cold feet" to think that this is not playing a big role. Better known as "buyers remorse". Great article…

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