Triage is a form of prioritizing patients in an emergency room so that those with the most severe or life threatening injuries are attended to prior to those that have milder injuries. While reviewing multiple offers has little to do with medical emergencies, it is vital for listing agents to consider and prioritize offers based on the buyer’s ability to perform.
This blog post is prompted by my recent observation that many local agents are not “triaging” their offers properly. Over the weekend, I learned of at least four offers where the buyers had “walked” during the short sale process and where the listing agents was surprised and did not know what to do next. So, I’d like to review a few simple ways for listing agents to prioritize offers, and to pay attention to which ones may be more “transaction threatening” (as opposed to life threatening).
To “triage” the offer requires paying careful attention to all of the details of the offer. Personally, if I am going to put lots of effort into all of the components of the transaction, I want the transaction to close—not only for me, but for my clients as well. So, I need to review the offers and counsel the sellers to help them select a buyer who is willing to wait, well-qualified, and actually interested in seeing a successful closing.
Here are a couple of simple ways to do that:
Review the buyer’s pre-qualification or pre-approval letter. If the property being purchased is a short sale, request updated pre-approval letters throughout the short sale process in order to assure that the buyer is still qualified (since terms and conditions may change).
If the buyer’s agent is also the buyer’s lender, request that the buyer also be pre-qualified by a neutral third party (another lender).
If the property being purchased is a condominium and the buyer is obtaining an FHA loan, confirm that the complex is approved for FHA buyers. Remember that if the transaction is a short sale, a complex that qualifies for FHA now may not qualify in a few months.
Consider such items as pest control, septic, home warranty, HOA transfer fees. If the transaction is a short sale, the bank may not approve these fees. Is the buyer willing to accept the property if the bank cannot or will not pay for these fees? Will the seller be willing to pay these fees? Agents, do you really want to spend three months working on a transaction with a buyer who may or may not accept the property?
Buyer’s agents have it tough in this market. It is very hard to get buyers into properties and see successful closings. But, listing agents have it tough as well—working many, many hours in hopes of a successful closing only to have a buyer walk at the eleventh hour.
Using a counter offer and addendum to triage your purchase contracts will help you to learn which offers are “life threatening” and which ones will close successfully.