If you watch the real estate reality TV shows, it comes as no surprise that the public thinks agents have it easy — put up a yard sign, take some photos, hold an open house, get an offer and collect a big commission check.
In fact, even new agents are surprised to find that putting the deal together is just the beginning. Up to 90 percent of the work is getting the transaction closed. This is where your ability to defuse deal killers will determine whether or not you will get paid.
Given the situation today with limited inventory, higher interest rates, soaring insurance quotes, unexpected HOA issues and fees, plus stricter mortgage underwriting, closing transactions is harder than ever. If your buyers are stretching to get into the house and they see an inspection report or insurance quote that scares them, they are more likely to walk away than ever.
Moreover, if you neglected to tell your buyers that the closing costs are in addition to their down payment, that can be enough to kill the deal because they don’t have the money.
5 deal killers and how to defuse them
Here’s a list of the most common deal killers and how to defuse them:
1. Inspection report woes
When I was executive director of training for the Jon Douglas Company, “Jack” Douglas would always tell our new agents, “There’s no such thing as a 100 percent house.” Since that time, I’ve also learned, “There’s no such thing as a 100 percent spouse — you just have to decide which set of warts you want to live with.”
My buyers would always get a good laugh out of that analogy because it helped them understand neither houses or spouses are perfect.
To help your buyers understand what is and is not important on their inspection report, categorize each item the inspector cites as:
- Major issue, needs attention now (roof leak, termite damage, plumbing issue).
- Normal maintenance (such as changing the HVAC filters or painting).
- Cosmetic or normally expected with the age of the home (older, but functional appliances, settling cracks, creaky floors).
This single step can prevent a large percentage of post-inspection blow-ups, as well as helping your buyers decide what’s most important to ask for on the inspection report.
Our brokerage policy was that we asked for a credit for the inspection items so the buyer can oversee the work, and if there is an issue with the vendor who did the work, it’s between them and your buyer who hired them.
2. Insurance shock
While the current seller may have an insurance policy on the house, a pattern that has emerged across the country in high-risk areas is that even the existing seller may no longer be able to renew with their current carrier.
The first step in defusing this deal killer is to locate an insurance broker who can shop for the best policies available that are also designed to fit with the house and your buyer.
Having said that, it is always smart to have your buyer get a quote from their existing carrier for their car insurance. They often can save substantial amounts of money if they bundle their car and house insurance together.
Assuming that the quotes are still higher than expected, describe the cost on a cost-per-day basis. For example, a quote of $365 higher can be looked at as “$1 a day.”
3. Appraisal surprises
When appraisals come in low, buyers often assume that they are overpaying. In this case, the best defense is a good offense. Before you write the offer, do a deep dive into the current predicted values on the various portals as well as your CMA. Then explain that whether it is a portal, the appraiser or even your CMA, these are all opinions of value.
Warn them that appraisals do come in low and that you are giving all your latest pricing information to the appraiser (if at all possible). Make sure that your buyer is the one who decides the offering price based upon the current comparable sales.
Second, if you’re representing the buyer, having them work with a mortgage broker who can shop other companies for loans is normally a better choice than applying at a single lender. In my own case, I had private banking with a major bank, and my mortgage broker still got a much better price than my private banker did.
Having this option has saved numerous deals for me over the years.
4. Buyer’s remorse
In a 2022 Inman article, I shared eight strategies for avoiding buyer’s remorse, several of which are outlined above. The best course of action is to tell your buyers up front that it is normal to second-guess whether they’re doing the right thing by buying now.
If you have conducted a thorough buyer’s interview, you already know what is motivating them to move. In most cases, they have shared one or more pain points. This is where you can use a “turn up the pain close.”
“When we first talked about the reasons for buying a new home, you were tired of living with the paper-thin walls where you can hear everything going on above your bedroom as well as next door. Think how good it will feel to get a good night’s sleep without hearing your neighbors all night long.”
Or, one of my personal favorites for renters becoming buyers,
“How long do you want to continue to pay your landlord’s mortgage, insurance and property taxes, rather than your own?”
5. Unwillingness to renegotiate
When problems like the ones surface, you can renegotiate, but it doesn’t necessarily mean you have to renegotiate the price. For example, could the sellers leave the big screen TV or the patio furniture rather than taking it with them? Would they be willing to pay for a home warranty for the buyers?
Being prepared to re-negotiate also means being willing to ask for price concessions. Show the sellers and their agents the inspection report/appraisal as well as your deep dive into the comparable sales. If the seller is unwilling to reduce their price, ask:
“What is the quality of your alternatives if you don’t sell now?”
That question often taps into the seller’s pain and their motivation for moving.
One last defuser
Virtually every deal comes with deal killers along the way. I found this script to be especially useful before you even write an offer.
When you have to make the call to tell them about an issue with the transaction, remind them that 95 percent of all deals have issues, and about 90 percent ultimately do close.
“About 95 percent of all deals have issues that can prevent them from closing, but 90 percent of the time, these deals will close if we work closely with the buyer/seller and their agent.”
Then say:
“Let’s go through this and see what we can figure out together to get the keys to this house in your hands on (closing date).”
Use these defusers, and you’ll save more deals and build lifelong client relationships.
Bernice Ross is president and CEO of BrokerageUP and RealEstateCoach.com, the founder of Profit.RealEstate and a national speaker, author and trainer with over 1,500 published articles.
