Andrew Wetzel's Musings

May 25, 2017

Congratulations! You Have an Executed Agreement. Now What?

Filed under: Uncategorized — awetzel @ 5:12 PM

Getting a purchase offer signed, regardless of which party you are representing, is always a thrill. As a Buyer Agent you may have shown an endless array of properties that all seemed to lack that “one thing” that caused the Buyer to keep looking. Perhaps you have had one or more offers rejected or had your client terminate after an inspection. As a Listing Agent, perhaps your listing sold to the first Buyer or perhaps the house has been on the market forever or had unsuccessful past negotiations or a bad inspection. Each client is like a book:  there is a beginning, a middle and a conclusion (hopefully one that leads to sequels!).

New or newer agents too often fall into the trap of assuming that the executed agreement means that there is a commission check already lined up and waiting to drop into their hands. This could lead them to spend the money now or to relax with their prospecting which inevitably leads to vicious up and down earnings cycles. Frankly, I believe what that great philosopher Lawrence “Yogi” Berra said: it ain’t over until it’s over. I tell my clients that a sale is not concluded until the buyer has the keys and the seller has the money. I practice in PA so both typically happen whereas in some states settlement happens without the principals (the buyer and seller) in attendance. I cannot imagine doing a settlement without them.

Over the years I have developed a number of Real Estate philosophies. One that I try to remember and mention whenever I am handing my client an executed contract is that when a purchase offer has been fully executed, one party tends to be happier than the other. It would be fantastic if both parties were ecstatic! What would that look like? I spent many years in retail and that is a better environment for “instant gratification”: you see something you want to own more than you want to keep whatever it costs in your bank account and you make a “swap”. Even if the transaction happens online and you have to wait for your purchase to arrive, retail sales make selling and buying Real Estate look like surgery! I still cannot imagine wanting to operate on yourself.

As a Buyer Agent I have often heard a client say that they would have paid more. I have s strict philosophy when working with Buyers. I like to see them get pre-qualified for the maximum amount a lender will loan them and then I like to have the Buyer determine what their comfort level is. Last decade both numbers were essentially the same for too many. Of course many Buyers object, saying that they worry that a Seller might ask for a higher offer. My response is that what a property is “worth” is not determined by the Buyer’s assets but that we need to keep the dialog going if we are to be successful. This strategy avoids having numerous pre-qualification letters that you pull out like playing a card game. Early on I had a Listing Agent ask if the financials we provided were the maximum or was it worth their time to “counter” our offer. In the end my clients did not get the house but were afforded a chance to continue bidding.

The other aspect here is that I do not ask how high a Buyer will go. I tell them that we may need to discuss that as the negotiations proceed but I do not need to know it at the outset and want to make sure that I earn their trust first. If we are able to get an agreement signed and if they tell me they would have gone higher, I suggest they keep that in mind as the process unfolds. On the other hand, if they feel they went higher than they intended, the inspections become more important because they can use them to recover some of what they think they overspent. That is a tough way to go!

The same philosophy holds on the Listing side. Sure, I need to know what a Seller may owe, what their plans are after they sell and how they view their local market. What they accept from a Buyer as compared to what they “wanted” will determine how they respond to the ongoing roller coaster we call getting a property to settlement.

My role as a client’s agent starts with earning their trust, explaining the process and their local market to them, answering their questions, making suggestions and, if hired, advising them throughout the process. We are the Director and we know the road ahead. For many clients, this is their first “trip” and they depend on us. In fact, they are hiring us for our experience and our time. Let’s make sure that we know whether we want to be “hired” and whether we can meet their needs and ours.

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