With all apologies to Morrissey and the Smiths…

There’s too much caffeine in your bloodstream…

Recently, my lovely bride relayed a story about a family at our kids’ school.  This family (I’ll call them the Smiths – ha!) has successfully sold their home and was endeavoring to purchase a new home in the same community.  A “move up” buyer in Michigan!  Woo Hoo!

If only the story was that cut and dry…

As happens all too frequently now, the Smiths’ purchase has been marred by a recalcitrant seller.  You see, the appraisal on the home came back “significantly lower” than the purchase price, and the seller refused to budge on the contract sales price.  The reason provided for not budging on the price? Because going any lower than the original contract sales price would require the seller to bring money to the table or go the short sale route.

Never mind the fact that it will take at least another 30 days to get to this EXACT spot in the transaction with a new buyer…oh, and the next purchase agreement will almost certainly be for LESS money, which means an even BIGGER difference in sales price and mortgage balance…

GAH!

…And a Lack of Real Spice in Your Life.

Let me get this right:

The listing agent offers for sale a home whose owners are pretty close to their current mortgage balance.  Seemingly unaware of HOW close to the mortgage balance the sellers are, the listing agent receives, negotiates and gets signatures on a purchase agreement for the seller’s home.  This sets into motion a series of events most real estate agents are familiar with and comes to the point of having an appraisal done on the home.

Setting aside any issues with comps and choices that the appraiser may have or may have not made, the fact remains that two families, and likely more, will be highly inconvenienced because the listing agent didn’t qualify the seller’s ability to successfully navigate all applicable obstacles to get to the closing table.

And by inconvenienced, I mean “will need to move twice in the span of two months, and will need to ship the dog to family member A’s home whilst staying at family member B’s home.”  Oh, and family member B’s home is easily 20 miles from the kids’ school.  On top of which is laid the big, fat, greasy blanket of stress of trying to find another home to purchase.

I’d hate the pain of the strain all over again…

Right now, my son’s friend’s family is stressing over just those issues.  Additionally, they really liked this house!  And all of this could have been avoided by the listing agent asking the tough questions of the seller up front, at the listing table.

Look, no one can fault the position of the sellers in this market and economy.  There IS a solution to their situation as well.

The blame for this situation falls SQUARELY on the listing agent.  To take a listing without understanding just how thin the difference between sale and no sale is for the seller screams of incompetency.  Look, by taking the listing, there is an implication that “we will get this home sold.”  And while the agent has done part of their job by getting an acceptable offer on the table, more due diligence by the agent would have been able to predict or see this eventuality and mitigate the damage.

The fact remains that the listing agent had to or should have known the point at which the sellers could not execute a sale.  Communicating this critical information to the poor Smiths, already on the hook to purchase the home, should have been the utmost priority.

A Customer Service Fail of Epic Proportion

Unfortunately, it’s being repeated on a nearly daily basis.

I realize that in a “normal market,” sequential related closings (as they’re known in the biz, “dominoes” that *hopefully* fall in the correct sequence) are a challenge to pull together.  How much MORE difficult is that process in today’s challenging market?  How much more important is it to qualify your clients?  And the qualification of a client is not solely for the benefit of the real estate agent!

It is my opinion that the listing agent took the listing without knowing the margins and without considering the ramifications for everyone that would potentially be involved.  The blinders were on and the only thing the agent could see was the commission at the end… The trouble is, there won’t be a commission at the end.

The real question is: were the blinders on out of ignorance or willful ignorance?

Michigan’s housing market is still searching for a bottom in many locales.  The offer that was agreed upon, and which has now fallen apart, will likely be the most the seller could get in the current market environment.  Instead of advising the client and pointing out that they would likely need to execute a short sale or find other means to come up with the shortage from the onset of the listing, the clients were led down a primrose path that deluded others into thinking they could purchase this home.

A Rush and A Push and the Land That We Stand On is Ours

As a real estate brokerage, our focus is on the client, the real estate consumer.  From their perspective, what is it that they want and need out of real estate?  Part of our job is to answer their questions without regard to our own pocketbook and help them attain their goals. This is the basic, fundamental fiduciary responsibility every Realtor has to every client they represent in an agency capacity.

Our market has been literally ravaged for a few years by the downturn in housing and our own state’s struggling economy.  The possibility of a short sale or the sellers being upside down in this marketplace is a real, tangible, don’t forget to consider it, issue when listing a home.  To not even consider the mortgage balance as something that could possibly, remotely affect the sale of a home, can be construed as willful ignorance.

The raging debate about #RTB, or “raising the bar,” in my opinion, comes down to this: Do you work for your clients with an eye on the end commission, or do you trust that your own ability to meet and exceed their expectations will garner you even more business?

This is a very simplistic question, yet admittedly is rife for debate itself!

I submit that a rush and a push is needed in not only our own businesses, but the real estate industry as a whole.  For my friends at my son’s school, I am sorry you had to bear the brunt of a fellow agent’s devotion to the dollar.  I’m sorry that the agent’s blatant disregard for critical thinking and complete lack of consideration towards others’ particular station in life caused this stress in your life.

I only hope our kids can still play together.

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[photo credit: nettsu]