Pulse: Readers Share Stories Of Flopped Real Estate Deals
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Pulse is a recurring column where we ask for readers’ takes on varying topics in a weekly survey and report back with our findings.
No matter what stage you are in your career, every real estate agent will experience a failed deal at some point. A dead deal is no fun — it costs everyone time, energy and resources. But of course, there’s a lot to learn from those failures.
That’s why, last week, we asked you to share your stories, and more importantly, what you’ve learned from those flopped transactions. New agents, are you listening? Take the time to assess these situations, what went wrong and what could’ve been done differently.
- Two days before closing, the buyer’s agent called to tell me they were not going to proceed with the purchase because the wife was having health issues. The husband did not want to put her through the stress of a move. They walked away and forfeited their $2,500 earnest money deposit.
The sellers were under contract to purchase a home, and the termination of this contract put them in a tough position. They ended up proceeding with their purchase with funds from their brokerage account. The home went under contract again and closed a month later than the original contract.
Lesson learned, craft the contract with additional earnest money due at the end of the due diligence period. The $2,500 deposit didn’t begin to cover the additional expenses incurred by the seller. On a sad note, the buyer passed away a short time after terminating the contract. Her husband made the right decision.
- Put your ego aside, and get the deal closed for your client. It’s about them, not you!
- What happened? Five buyers backing out! Yes, five. Three were due to the agent still writing offers while in contract with my seller, but the last two were a lesson learned, which I’ll never repeat again. I had a seller who was screaming every time she called for a status because her rural property was not selling.
Now, mind you, she was in the area of the Northern California Zogg fire and took a direct hit of fire retardant, and of course in disclosing the fire, the buyer ran. Then there was the husband who reluctantly took a $5,000 over asking offer and began telling the neighbors and anyone else who would listen that they finally “sold out” to buyers who were of Asian descent, while using derogatory terms to describe the sale to friends.
The buyer’s agent received a call from his buyer saying they feared closing on the sale and did not want to live there any longer because the husband’s words got back to the buyer.
When I spoke with the seller about why they were backing out, they said they didn’t want me showing their home to anyone of of Asian descent. I explained to them the fair housing laws they were breaking. I parted ways with this client and lost $2,000 in marketing.
Lesson learned? In the “other terms” area of the contract, write on the blank line, “If seller breaks contract or does not abide by rules of showing under fair housing, all marketing is to be reimbursed to the agent. In addition, all negotiated EMD funds to be kept by the seller will be split 50/50 with the broker.” I will be strongly vetting all sellers and buyers in the future!
- I had prequalified buyers whose financing didn’t get approved by underwriters at the last minute! And they lost their deposit. Turns out, they had a cash rental income from their old home, as they had rented it out to a family member. They couldn’t prove that income as they spent the cash over various household expenses every month. Without a paper trail of this income, they didn’t qualify.
My lesson learned was: Tell people it’s better to get not just prequalified but also preapproved by an underwriter, so that there are no last-minute surprises. The buyers thought they were up to date and never late on their old home, and thus getting this second home would be a breeze. (Three years later , I did help them purchase a second larger home they wanted — and this time it was all good.)
- I have learned that it is pretty easy to sell a house twice or three times if needed. We let our sellers know not to worry. Most of the time the “deal” is just delayed, but if it falls through, we absolutely can sell the house again. I like to remind clients and agents that there are few guarantees when it comes to buying or selling real estate.
What did we miss? Please share your thoughts in the comments section below.
Editor’s note: These responses were given anonymously and, therefore, are not attributed to anyone specifically. Responses were also edited for grammar and clarity. Inman doesn’t endorse any specific method and regulations may vary from state to state.