When Last-Minute Problem Threatens Sale

Imagine this. You’ve sold your home and all the contractcontingencies are removed. The buyers’ mortgage is approved and you’reready to close--almost.

When the buyers entered into contract to buy your home they loved yourhome, but they thought that the living room was dark. This wasn’t a majorobstacle, however, because the buyers were sure the problem could becorrected with skylights.

As is typical of most home purchases, buyers and sellers work first onsatisfying major contract contingencies like financing, inspections orselling another home.

Then they turn their attention to issues relating to improvementsthey’d like to make to the new home.

In this case, what seemed like a workable situation turned into anightmare the week before closing. Roofers who visited the property togive bids for skylight retrofitting said that the job could be done, butthat the roof was at the end of its life.

The buyers had contracted to buy a home with a roof that would lastfor the foreseeable future. Without this guarantee, they weren’t surethey wanted to buy the house at all.

First-Time Tip
At the first sign of a major deal-breaker problem, thebuyers, the sellers and their agents should start working on a solution.This often means the agents have to drop whatever else they have on theiragenda to free the time necessary to glue the deal back together.

If you find that your agent isn’t bending over backward to work out asolution, ask to speak with his or her manager and explain your need forimmediate assistance.

A positive attitude and a good working relationship between the agentsinvolved will help a lot. Also, the more information you can obtain aboutremedies the better. You are usually dealing with two issues:

• The first is figuring out what options are available. Is the roofsalvageable? If so, can skylights be satisfactorily installed?

• The second issue is money. How much will it cost to reach an amiablesolution to the problem? If the only reasonable option is to install anentire new roof, an argument can be made that the buyer should share insome of this cost.

After all, the buyers didn’t contract to buy a home with a brand-newroof. They will benefit from the new roof for years to come.

Both buyers and sellers need to evaluate the time, effort and moneythat will be involved if they are unable to reach a resolution to thedilemma. Money is usually spent on obtaining financing and inspecting theproperty. By the week before closing, moving plans have been made. Tostart all over again could be a costly proposition, particularly if thereisn’t another suitable house on the market.

There are certainly times when it’s best to call it quits. One homebuyer literally began losing sleep about several defects which werediscovered in the home that he was about to buy.

Of particular concern was the asbestos underneath the linoleum. Whilethe asbestos could be removed, the buyer’s emotional concerns made itimpossible for him to move forward with the deal.

Another buyer couldn’t abide the fact that a rape had occurred on theproperty years ago.

In both of these cases, the buyers were better off moving on in theirhouse hunts.

The Closing
Your best defense against a deal falling apart at thelast minute is a tightly written purchase contract--one that anticipatesand ties up as many loopholes as possible after full disclosure of anydefects in the property.

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Where Your Agent’s Commission Goes

Q: How do real estate agents get paid?
A: Most real estate agents work for a commission, most often apercentage of the sale price of the home being sold.

In a conventional home sale, the seller pays the commission. It isnegotiable, but is usually in the range of 5%-7% of the sale price. Theseller’s agent typically shares the commission on a 50-50 basis with anyother agent who finds a buyer for the property.

There is most often another commission-splitting arrangement thatoccurs between the agents involved and the brokers they work for.

For example, let’s say you’re selling a house for $300,000 and youhave agreed to pay your agent 6% of the sale price as compensation forcompleting the sale. The commission in this case is $18,000.

If another broker is working with the buyer for your house, thatbroker will receive $9,000 at closing, leaving $9,000 for your broker.

Expenses are usually deducted from the commission to pay overheadcosts before the agents are paid. Overhead includes such things as thecost of running the office and advertising properties.

So by the time your agent actually gets paid, it’s likely not to beanywhere near the 6% you agreed to pay for his or her services.

Also, agents incur expenses as a cost of doing business. Typicallythese expenses include such things as a decent car, gasoline, a computer,access to the Multiple Listing Service, errors and omission insurance, toname a few.