Oct 23

Real Estate: Stick to the Plan

by Joy Earls

One of the most exhilarating feelings in real estate is when a buyer and seller agree on a contract and sign a deal.  Just to get to that point can take so much time and extreme effort. But what comes next is even more important and must be carefully thought through. The actions that occur between the time of signing a real estate contract and finally moving into a new home can sometimes destroy a deal if not worked through methodically. The buying and selling process can happen as quickly as a week, which doesn’t happen frequently. It can take thirty to forty days, which is common. Or buyers and sellers can agree on a year or more. However, whatever is agreed upon is critically important and must be discussed carefully. The sales price of a home is extremely important but focusing on only that one aspect, can be detrimental. If the other details are downplayed a real estate deal can easily and quickly erode. The following story happens more often than it should. And that previously sweet feeling of moving forward can quickly turn sour and head the other way.

A professional moving assistant, Mandy called recently. She was hired to help an elderly gentleman clean out his home filled with a lifetime of belongings. Mandy has done her work over and over and knows how to do it right. She arranged for an estate sale, moving of unwanted items and a timely preparation of the home for the new owners. The home was under contract with some buyers. After she was informed of the
contract closing date, she scheduled her work accordingly. As anyone knows who has emptied a home filled with a lifetime of possessions, this is no easy task. Her schedule was set when she received a call from the sellers that the buyers needed to move two weeks earlier than planned. The stress began to mount. The buyers were selling their home. They now needed to empty their own home for their buyers. I have seen this occur where the buyers of the buyer’s home also have a buyer. Everyone plans to move on the same day, simultaneously. As confusing as it sounds, it happens often and I started calling this “The Domino Effect”. It can all work smoothly, but just like dominos, the pieces have to be perfectly aligned.

Mandy was dragged into the middle of this dispute. Mandy was worried and stressed. At one point she was even asked to take possession of the home and call the buyers when the house was ready for them to move in. As we talked it over, she quickly realized this was outside of her responsibilities. She was doing a great job and performing as she was instructed in her contract. The buyers and sellers had to get together and look at options. But one of those choices could not involve putting Mandy, in a role outside of her contractual responsibilities.

There are always options. When I was first out of college I moved to Colorado. I applied for a great paying job at a gold mine. They hired me under the conditions that I had a place to live. This was a very small town and it was difficult to find housing. I immediately said that wasn’t a problem, even though I had no idea where I would live. The manager grinned (I think he knew I didn’t know where I would live either) but he hired me. I was young, I lived in a tent by the creek for a month, woke up to frozen water that had to be thawed to make coffee and was fine until a house came open for rent. I was also only twenty two and my possessions all fit in my car. It was an adventure. Some buyers may be okay with that scenario, too. They can move their possessions into a storage unit and then rent for a while. They may choose to camp, as I did, although it might include a camper. But usually that isn’t what most buyers have in mind. They want to live in their new home immediately.

So why does this happen over and over in real estate deals? Buyers want to get into the home they are purchasing earlier than the contract allows. Sellers can’t move as quickly as they thought they could, so they need more time. Things change. Once a purchase agreement is already signed, it can be difficult to back track and make new demands. The old saying that an emergency on your part does not constitute one on mine applies here. I strongly advocate that parties work together for a common goal. But it is much easier to do that when you are working on the contract before it is fully signed. In addition to negotiating price, be sure to look carefully at dates and the process that will ensue as you work your way to the closing table. Discuss if the buyer is selling their home, how the timing is set up for that process. Talk about the seller and where they are going. Are they moving across town, across the country or overseas? Simple things like arranging for a mover can create havoc. In Missoula, the U of M students relocate in May and if that’s when you are planning on closing, a mover may not be available at all. These are not small details. Even deciding on the date of closing can be overlooked. The day after a long holiday can be a stressful day anyway, so hoping that everything can fall in place on the Tuesday after Labor Day weekend may be a setup for failure. When buyers have a lender involved, which is often, the financial institution has to fund the loan or send the money to the closing agent. This may not happen until the next business day, which may be Monday, if closing is scheduled for a Friday afternoon. Or, if it’s a holiday weekend the buyer may not own the home until Tuesday. This can cause some seriously unhappy people that have arranged for friends to help them move over a long weekend, when they have to reschedule. That may involve more than pizza and beer to incentivize your helpers.

While some of these examples seem so simple to avoid, why do they happen over and over? Why do we have “The Domino Effect”? Why do tensions mount and people start talking about real estate deals breaking down? It can often happen because buyers and sellers have focused their contracts sales price and not spent enough time reviewing other items such as important dates. Price is always critical when selling or buying a property, but don’t overlook how serious it will be when you have to move and have nowhere to go because you didn’t pay close attention to the dates in your contract. Enjoy that exhilarating feeling when you are working on a real estate contract and have agreed on a price, but take a breath and then look at dates to make sure you can live with them. The one thing we know for sure as we are in the fifty-five plus group is that one month can easily feel like a week. And you might not want to be camping by the creek while you wait for your new home to be ready.

Joy Earls is a Missoula real estate agent who writes a regular column for Montana 55.

 

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