Managing Clients’ Expectations In A Seller’s Market – Part 2/2
In my last issue I wrote about managing a client’s expectations in order to avoid turning a happy client into an unhappy (non-referral source) one. Here are a few rules I have come up with to put that plan into effect.
Be careful about telling a buyer we have a deal: We know that a deal is not “done” until both sides sign. But don’t assume our buyers know this important rule. It’s easy for a broker to say “we have a deal” when the parties have a meeting of the minds on price, but before the lawyers reduce the deal to a signed contract. Manage expectations of buyers by explaining that the seller accepts their terms but nothing is legally binding until the contract is signed by both sides. This simple explanation will save a lot of frustration and anger by buyers who are outbid during the contract negotiation phase.
Loan approval does not mean clear to close: The issuance of the loan commitment letter by the bank is a milestone along the way to closing. But, understandably, some clients mistakenly think that event means we are closing tomorrow. And it always surprises me when brokers add fuel to the fire by emailing the client something like this: “Congratulations on the loan commitment letter. I spoke to the other broker and everyone can close on Tuesday”. An excited buyer who is anxious to close will now have an expectation that almost surely cannot be met. It’s imperative that we explain to clients the meaning of the issuance of the commitment. It’s important, and a big event, but until the lender announces the magic words “we are clear to close”, leave the champagne uncorked for the moment.
Condominiums do have board packages: I have written extensively on the trend of condominiums to act more and more like cooperatives with respect to the application process. Most buyers think there is no approval process in a condominium. That is true, technically, in as much as most condominium declarations give the board a right of first refusal, as opposed to a right of approval. But be careful. There is still a “waiver package” that must be completed by buyers and their purchase agreement contractually obligates them to do so. The “application” is an application for a waiver, rather than one for approval of the transaction, but this nuance does not necessarily translate into brevity of application requirements. For some inordinate reason, condominiums routinely burden buyers and sellers with onerous waiver packages requiring bank statements, tax returns, and other burdensome financial documentation in order to “evaluate” whether the condominium will exercise its right of first refusal. Prepare buyers, and explain to them that part of the buying process requires this tedious step.