Let’s use a condo example again to help you understand why it can be very risky to have any agent help you sell your home; you MUST know what you are talking about to protect the seller.
We’ll use an all-to-true, real-life horror story to highlight the issue…
A seller lists his condo for sale with an asking price of $300,000.
Two days later, he receives two offers.
The first offer is for $300,000 with a 5% down payment.
The second offer is for $290,000 with a 20% down payment.
All other factors are equal.
Common sense tells the seller to take the full price offer, as he believes he will walk away from the deal with more money.
So he does.
The buyer has a strong pre-approval from a local lender and everything looks good to close at the end of the month.
The seller is excited and begins to plan his own move since the condo is now under contract.
A week later the appraisal comes in from the buyer’s lender at a $300,000 value – the seller is teeming with even more confidence the deal will close as scheduled.
A week after that (about 10 days before closing) the lender calls the buyer and tells him the condo questionnaire they just received from the management company shows the condominium’s investor concentration is over the limit for a mortgage loan where the buyer is making less than a 20% down payment.
The buyer tells his lender he does not have the other 10% to put toward the down payment.
The lender tells the buyer he cannot approve the loan and must find another condo to purchase.
The buyer moves on; the seller is left to start back at square one.
Unfortunately, three to four weeks have now passed and the market is starting to shift.
Worse yet, many people wrongly assume the buyer might have walked away for some other reason.
To keep his new house, the seller must sell quickly.
Desperation is setting in and with it, the arrival of low-ball offers.
The seller is wishing he had taken that $290,000 offer with 20% down at this point.
Had he – or his agent – taken a few minutes to do some homework, he would have known to only accept offers with at least a 20% down payment.
Does this sound like the type of transaction you should entrust with an agent just because he or she is a friend or family member?