Real estate transaction mistakes happen. Things fall apart, you-know-what hits the fan. The problem is that, especially when it happens in a real estate deal, there are a whole lot of people impacted.
Not paying attention to the rules and regs can blow up a deal. Assumptions can blow up a deal. Real estate-unaware clients can really blow up a deal.
Still, some real estate mistakes happen and, according to the pros we spoke with, the following are among the most common culprits when a transaction blows up.
1. You can’t sell what you don’t own
“We signed closing papers last week and the day we were to take possession of our home the seller didn’t sign,” begins a tale of woe in the old “Voices” section at Trulia.com.
“Her agent told my agent that the seller had gone bankrupt in the past year and needed court permission to sell. And also tells us the seller hasn’t made payments on the house for months. This is the first time we heard of any of this.”
Sounds to me like someone failed to read the prelim.
Aside from that, the question “Do you have the legal authority to sell the home?” is a listing agent’s best friend. “Is there anyone else on the title?” is the second bf. And, as a new agent, you need to know that these should be the first questions you ask a potential listing client.
Sometimes the seller thinks he has authority by power of attorney but doesn’t realize the power of attorney has expired.
“It is usually a matter of an Internet search or a phone call to a title company to determine the legal owner of the property,” explains Seattle real estate attorney Evan L. Loeffler at americanbar.org.
He goes on to add the second understatement-of-the-year warning: “It would be wise to make that call early on.”
2. EVERYTHING should be in writing
We all learned in real estate school that relying on verbal agreements in the sale of real estate is a recipe for disaster (Statute of Frauds, remember?). Yet, there are still agents who do it, especially when it comes to the smaller details in the contract.
A verbal agreement from the seller to make a certain repair, or to leave the washer and dryer is just as unenforceable as a verbal agreement on price. Sure, the injured party can take the matter to court, but proving a verbal agreement isn’t easy.
And, the deal explodes
Never rely on a verbal promise in any part of the transaction, regardless of how seemingly small it may be.
3. It’s not over ‘til the lender sings
“How the heck can a lender pull out financing so close and with zero indication this would happen? We figured our home sale was a done deal,” complains a Wisconsin homeowner at biggerpockets.com.
How sad that this seller’s agent didn’t warn him that the sale wasn’t a “done deal” until it closes. That between acceptance and closing there is a whole lot of you-know-what that might hit the fan? And, yes, right up until the last minute.
Real estate school was only the beginning of your education. Hang around with seasoned agents, ask one to mentor you. It doesn’t take long to get the hang of it, but it does require attention to every detail.
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