What's Your Contingency Plan?

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As Broker, most of the calls I have been getting from our agents as of late deal with holding contracts together upon receiving the inspection response.

The most recent edition of the Realtor magazine published an article addressing inspections and contingencies in general. It’s called, “What’s Your Contingency Plan? Manage conflict when buyer demands put your seller on the defensive” by John N. Frank.

A synopsis of that article follows:

  • Your seller receives an offer, the price is right and the buyer asks for a contingency. Your client balks. The seller would rather walk away than accept a demand that he or she thinks is unreasonable.
  • “I’ve had sellers who …... regard the buyer as the enemy” because of contingencies, says sales associate Carol Paruch with Smith and Baird, Schaumburg IL.
  • Contingency negotiations can put sellers on the defense,
  • YOU MAY EVEN GET DEFENSIVE YOURSELF TO PROTECT YOUR CLIENTS’ INTERESTS AND BEFORE YOU KNOW IT YOU’RE ALL VEERING OFF COURSE.
  • But in tense moments such as these, sellers need a reminder to evaluate contingencies based on what makes the most sense for the transaction. A few thousand dollars in repairs may be worth spending to close the sale, especially if the seller’s home has stalled on the market.
  • Case in point. A buyer demanded that Paruch’s seller reroute the home’s sump pump drain.
  • The seller initially refused, but Paruch helped her client understand that it would be more expensive to pass on selling the home – which had already been on the market for six months.
  • The seller agreed to give the buyer an $8,000 credit.
  • However, when buyer contingencies seem excessive or a disadvantage in negotiations, seek measures to protect your client.
  • For example, Paruch had another seller who received an offer contingent on the buyers receiving inheritance funds.
  • Paruch counseled her seller to require documentation showing not only that the money would be available but just as importantly, WHEN.
  • That gave the Seller the confidence to go forward.
  • Sometimes, to resolve a contingency conflict, an agent may have to step up and monetarily contribute.
  • Pam Roberts, a sales associate with William Pitt Sotheby’s International Realty in Stamford, CT had sellers who listed 17 items such as shelves and mirrors as not included in the sale.
  • The buyer asked for some items to be included.
  • They reached an agreement on everyone except window shades and “It became a standoff,” Roberts says.
  • Rather than let the deal fall through, she wrote a $100 check for the blinds for the buyer.
  • Roberts made a costlier commitment when a buyer spotted moisture collecting in her seller’s basement.
  • The buyer demanded that the pumps be replaced for $4,000. The seller refused.
  • Roberts, the buyer’s agent, and the buyer and seller’s real state attorneys split the cost four ways so the sale could close.
  • The buyer paid $1.5 million for the home, and the commission was $37,500. “So rather than starting over and spending more time and money, the gift of $1,000” was a small price to pay.
  • Dealing with buyer contingencies is a potentially dicey part of the transaction.
  • “This is when your client requires your reasoning skills”, says Lori Joyal, managing broker at Lila Delman Real Estate in Watch Hill, R.I.
  • “We need to calm the situation and act ethically to resolve it. Breathe and don’t overreact.”

For the full article go to: http://realtormag.realtor.org/sales-and-marketing/feature/article/2017/07/calm-sellers-nerves-over-contingencies

 

RE/MAX Alliance