Do you remember when you got your first checking account? Perhaps you were eighteen and you were told that when you sign a check, you are signing a binding contract.
Same goes for the real estate purchase contract. It’s binding. I’m not sure what has happened over the last several years, but in the state of California, it appears as if many people are not taking the real estate purchase contract seriously.
For example, a buyer offers to purchase a property and close the transaction within 45 days of acceptance of the offer by the seller. Seller accepts, and 30 days into the transaction, the buyer says that his lender cannot close the transaction on time. The lender needs another 21 days.
Or, a buyer offers to purchase a property as-is for a specified price. Then, after the offer is accepted, the buyer changes his mind and wants to pay less.
Or, the buyer makes an offer to purchase a home and the seller accepts (perhaps after multiple counter offers). The buyer then continues to surf the Internet and explore other available options, and wants his or her Realtor® to continue showing homes even though the buyer is under contract.
While everyone understands that circumstances arise that can impact a buyer’s decision to purchase a property, unfortunate situations like these do not land buyers and their agents at the closing table.
Three Ways to Set Home Buyer Expectations
A significant number of transactional pitfalls could easily be avoided if buyers’ agents set expectations accordingly prior to showing homes. Here are three ways to set expectations accordingly and help avoid deals falling through:
- Meet a prospective client at the office prior to showing homes. You get a call on your cellphone from a person who is driving by one of your signs and you run out to show the property. I’d try to avoid this at all costs. Like a doctor, a lawyer, or an accountant, you need to set an appointment to meet at your office. When you meet at your office prior to showings, you cement that you are running a professional business and not just bouncing around town to satisfy someone’s whim.
- Discuss financing. Often an awkward situation, nobody wants to show a prospective buyer a number of homes only to find out that he or she doesn’t even qualify to purchase one. With tight qualifying guidelines nowadays, it may even be a good idea to get your new buyer qualified with one of your own preferred lenders—since you know how they work and that they are reliable.
- Counsel buyers prior to showing. It’s a good idea to provide information about the real estate market—including market time and buying process—prior to showing property. When buyers understand the process and your role in it, fewer problems arise down the road.
It is vital to set buyer expectations and to explain the real estate contract in great detail. Make sure that your buyer knows what s/he is signing—a binding contract. Frivolous changes and cancellations can be costly—to the buyer, to the seller, and (of course) to you as well.