There are many things you can do to ensure smooth sailing of your residential transactions, whether it be for the buyer or seller. Although it can create more work, taking additional steps to ensure the satisfaction of your clients is key, at the end of the day, we are here to do what is best for them.
Over the past year, we have noticed a few common mistakes made in contracts and would encourage making recommendations to your clients to prevent these issues in the future. A happy client translates to great referrals and ongoing work.
Too long to read? Key points listed
· Listen to your clients – understand what they are saying about their circumstances and what their intentions are with their sale or purchase to ensure all conditions are accurately drafted.
· Advise your clients – make sure your clients understand the risk they are taking and ensure that all conditions are reasonable and provide for enough time to actually settle the contract – spending an additional 30-60 minutes properly drafting a contract may save many hours of dealing with terminated contracts and achieve a great result for your clients.
· “Agents only care about their commission” – how often is that misconception spread?
· Deposits are important – one of the most overlooked conditions of a contract – make sure the deposit is paid on time!
· Time is of the essence – this is another key term of a contract. It helps keep everything running smoothly and efficiently for the satisfaction of all parties - you want to be the agent everyone talks about not just for being able to get the right house/buyer for your clients but also for professionalism and efficiency.
Contract Conditions – not listening to our clients
There are always hurdles to jump through when determining what conditions need to be added into a contract. Listening to our clients and understanding their situation is key.
Due Diligence
Encouraging buyers to conduct their due diligence with searches is a great start. This will allow them to go through the history of the home (if the structure is existing) and will minimise the amount of feedback along the lines of “I didn’t know about that” or “you didn’t tell me that this was wrong”. We have had clients return to us years after their purchase advising that they are now selling that property and have issues with unapproved structures. Of course, this may increase the chances of a contract falling over if you come across a buyer who is unhappy with the state of the home and the seller is unwilling to make changes, but the right buyer will make the seller happy and in turn, provide a great result.
Building and Pest
Far too often we have seen the building and pest condition due in a completely unrealistic amount of time. What are you gaining by making it for an impossible window of time? Yes of course, sometimes the buyer will be able to meet the deadline and the property will settle quickly but, more often than not, the buyer may seek an extension of time and delay settlement. If you cannot work with the buyer you will just see more contracts terminated than settled, what impression does this leave on the clients?
Subject to the Sale of the Buyers Home
Another condition consistently missed – what position does this put all parties in? Let's avoid the obvious issues with this and ensure that we are listening to our clients and preparing the contract to provide the best outcome for them.
Transfer of Risk
We have noticed that buyers are consistently surprised that the property (in most cases) is at the risk of the buyer from 5pm the next business day after signing the contract. Generally, their shock comes from the fact that they are not in possession of the property but are at risk. It is so important to advise the buyers to obtain insurance (especially since it is generally a condition of the contract) so they are protected during this risk period and to remind them that the seller does have an obligation to take reasonable care of the property until settlement.
Deposits
In our opinion, deposit payments are one of the most overlooked conditions of a contract. “Has the buyer paid the deposit? – yeah probably” – this is not the right mindset. Payment of the deposit is a guarantee of performance by the buyer, wouldn’t we want this for our sellers? Again, key terms to ensure client satisfaction, less terminations and contract efficiency.