A listing agent who is a prudent risk manager will, therefore, do everything possible to minimize the window of time between an accepted offer and a signed contract. Here are four ways to minimize risk when listing condo and co-op apartments.
1. Locate building due diligence materials
A seasoned listing agent will locate all building “due diligence” materials well in advance of having an accepted offer. Assembling all documentation early on will minimize the time it takes for the buyer’s attorney to conduct his or her due diligence.
Missing building documentation, such as the “Offering Plan,” is one of the most common reasons for delays in a buyer signing a contract. Other essential materials you should assemble in advance include: two years of financials, building purchase and sublet applications, annual tax deduction letter (in the case of a co-op) and the most recent building budget.
2. Set expectations with your buyer
Educating prospective buyers before their offer is accepted can also help minimize the risk of a buyer backing out later down the line.
- Are you familiar with the post-offer acceptance process and timeline?
- Have you researched anticipated buyer closing costs?
- Do you understand the differences between a condo and a co-op?
- Will you request an inspection?
- Are you acquainted with deal contingencies?
- Are you prepared to complete a board application?
Although every deal has its own unique challenges, you can minimize the risk of a buyer backing out by establishing robust lines of communication with your buyer before their offer is officially accepted.
3. Select a real estate attorney and prepare paperwork
Listing agents often delay circulation of the “deal sheet” after receiving an accepted offer because their seller has not selected an attorney as of yet.
As a listing agent, one of the first things you should do is educate your seller on the process after accepting an offer and ask him or her to select a real estate attorney.
Another way to be proactive is to review the building’s purchase application to identify pages that require seller signatures. Taking care of these documents early will prevent delays in the submission of the condo or co-op purchase application later down the line.
4. Establish clear timing expectations
Before you accept an offer, you should establish clear timing expectations for a signed contract with the buyer (and his or her buyer’s agent, if applicable). You should also educate the seller on the reasons it’s important to move toward a fully-executed contract as soon as possible.
Setting a realistic yet expedient timeline with both the buyer and the seller for a signed contract will keep things moving as fast as possible even if there are unavoidable logistical delays caused by third parties (such as the managing agent).
Following these risk management techniques when listing condo and co-op apartments will result in a greater percentage of deals closed and more positive client reviews.
Over time, a consistent focus on risk management will also translate into higher sale prices, more repeat business and a stronger reputation for you and your brokerage.