As a Realtor, I get asked certain things pretty regularly.
- We’re in a bubble right? It’s gotta be a bubble. Tell me it’s a bubble. BUBBLE!
- Why do you guys always put your pictures on your business cards?
- Can’t I just sell my house myself in this hot a market?
The first two are pretty straight forward to answer.
We’re not in a bubble, at least not as I identify a bubble, which is when people are buying houses strictly because they think they will appreciate. Not to live in them, not to rent them out, just to have them for a period of time and then sell them for more. In our market, we have many people buying homes to live in and there are investors buying income properties to rent out. I see very few people buying homes and just letting them sit vacant, not caring about anything except the market appreciating. Until everyone is just buying real estate as a speculative play where all they are hoping for is a great return, I don’t think it’s a bubble. When buyers stop caring about any criteria of a house like location, attributes, curb appeal, layout, updates and so forth, then I’ll call it a bubble. For now, it ain’t a bubble.
As for the photos on cards, it’s pretty obvious. We’re just damn good looking people. Well, moderately good looking. Fine, we’re pretty average. The real reason is because people like to work with actual people, not brands or even names. Whether it’s accurate or not, when we look at a photo we think we can tell a lot about that person. When I have a listing and go through all the cards from Realtors, I always look at the photos and make quick judgements about the Realtor. Do they look friendly or mean? Trustworthy or shifty? It humanizes an otherwise corporate presentation of contact details.
The third question is a loaded one.
When you hear stories about homes selling in days or even hours for loads of money, with multiple buyers who are willing to pay almost anything, it’s fair to ask how listing agents add much value.
I write a lot about how a great Realtor can make a huge difference in selling your home, so I’m not going to talk about that again. If you hire me, I price it properly, I market it effectively and I negotiate it aggressively.
Today I want to pull back the curtain to show you what happens after it is sold and why sellers who don’t use agents often run into trouble. Here are three problems that can occur AFTER you sell your property, but before it actually closes.
- Oh, you want to actually receive the money we agreed upon?
When a property is sold, there may or may not be a financing condition attached to it. If there is one, it typically allows the buyer a short amount of time (5 days is fairly standard) to make sure their financing is in place. By the end of that time, the buyer needs to either waive that condition or the deal falls through.
In other cases, there is no financing condition because the Buyer either didn’t need one or there was so much competition that they had to present a clean offer without any conditions.
What many sellers don’t fully understand is that they need to understand the buyer’s financial situation and not just accept an offer without a financing condition and think everything is great.
While a firm Agreement of Purchase and Sale is a legally binding document, if the buyer can’t get financing after all, the house is not going to close. If an investment goes sour or a job is lost and the buyer can’t get a lender to give them the money, the deal won’t close.
A great Realtor takes steps to find out about the buyer’s financial condition, regardless of whether there is a financing condition or not. I don’t take “Don’t worry, he’s got the money” as a good enough answer. Sellers who don’t use a listing agent are at risk of the deal falling through because that high price with no conditions is from someone who can’t actually pay you what they promised.
- I thought I mentioned that.
The second problem that can happen after a property is sold but before it’s sold firm is that the buyer finds out something they didn’t know about the house.
There are very specific rules for Realtors that lay out what we must reveal to potential purchasers. Our regulatory body holds us to a higher standard, even than the law in some cases.
When you list with a great Realtor, we talk about the property, the history and what we must disclose. In many cases, sellers who work on their own say too much and they don’t get the price they could. Let’s focus on what happens if they don’t say enough and the home sells.
Most home purchases include the right to visit one or two more times to the property before closing. Whether it is for measurements, to make sure the fridge that was there when you saw the house is still there the day before closing or just to show off your soon to be new home, people like to go back to see the home.
During those visits, the proud purchasers can turn into bitter buyers if some new information comes to light.
- A neighbour who is thrilled to meet them and have respectable people moving in, particularly since the current owners kept getting into trouble with the law for growing pot in the house.
- A municipal work crew cutting down a tree in the backyard because an easement on the land that was never mentioned needs to be accessed.
- The father-in-law who is poking around the basement and asks if the knob and tube wiring is going to be a problem for insurance or financing.
If there are material defects that aren’t disclosed, or certain types of stigma attached to a property, a buyer may have a legitimate case for walking away from the firm deal. If they agree to keep going, the new information may mean financing or insurance is a real issue and if they can’t find a lender or an insurer to make the lender happy, the deal might not close.
A great Realtor makes sure that information that is pertinent is revealed at the best time, to minimize issues and prevent surprises.
- You can’t just change your mind!
When a seller doesn’t use a listing agent, they are dealing with buyers and their agents directly. Most sellers haven’t done that before, or if they have, they may have done it once or twice.
A great Realtor deals with dozens of buyers and their agents each and every year. They see good agents and bad agents, good brokerages and bad brokerages and they see deals that close and deals that fall apart.
On a few occasions I’ve advised my selling clients to not take a deal from a particular buyer because I’m worried the deal won’t close. They are often working with agents who play fast and loose with the paperwork and ask me to do things that are unethical or even illegal.
Buyers who aren’t bothered with little details, who don’t ask the questions that every other buyer does are a major red flag. While for most people the purchase of a home is a serious matter with weighty implications, some people are far more casual about it.
I have heard stories from other Realtors about deals that didn’t close because the purchaser changed their mind about the house. While “changing your mind” isn’t a valid reason for terminating a firm Agreement of Purchase and Sale, ask your lawyer what will happen on closing day.
If the buyer chooses to not cooperate any more, the seller will not get paid the money on closing day. No financing means no deal, which means that the house you sold is still yours.
Sellers who end up in this situation can of course go after the buyer in court. They can try to prove damages that allow them to keep some or all of the deposit. At the end of it though, a judge will not give you the money that was agreed upon for the home. If both parties don’t do their part, a sale will not happen.
Some buyers are OK with wasting a seller’s time and count on the fact that if they change their mind, most sellers are more concerned with getting the house back on the market and sold to someone else than going after them and tying up the house for months.
A great Realtor looks beyond the sale price and terms of the deal and advises their seller client if they think the deal will actually go through or not.
If you or someone you like wants to work with a Realtor who will make sure that not only does your house sell, it also closes, please get in touch. I’d love to be responsible for what comes next.
If the right rooms are facing south, a house is bright and sunny and cheerful; if the wrong rooms are facing south, the house is dark and gloomy.
This lesson speaks to another aspect of homes that is often either overlooked or not understood. When we walk through a house and feel it is warm and welcoming, it is often because the layout is designed to follow this lesson.
The most important rooms should be placed along the south side of the building and spread out along the east-west axis. For example, a living room or well-used dining area should have a southern exposure.