Victor’s Insider Scoop on Getting A Deal Closed In This Market …
April 1st, 2009 | top of page
To buy or not to buy that is the question. Sellers are remembering the halcyon days of only 18 months ago when they were in the driver’s seat and could pick and choose amongst competing, above–list–price offers from well–qualified buyers. The current marketplace has brokers facing frustrating listing situations when dealing with those same sellers who are now reluctant to budge on their price expectations in the face of current market realities while, in the back of their mind, they are worrying about whether prices will continue to fall.
On the other hand buyers are questioning the capital markets and are leery about whether property values will continue to decrease after they buy a property rendering the buyers upside down.
Loan underwriting has been getting more and more conservative from lenders who, if they will lend at all, have fewer dollars to lend and are offering lower loan–to–value loans at higher interest rates.
In order to get a deal closed on the contract terms I recommend that buyers have their financing lined up before they make an offer and that sellers verify that the buyer has achievable financing before they sign the contract. In the event that a lender elects to re–think loan terms mid– contract (that would never happen would it?) and the buyer is forced to re–trade here are my recommendations to try to save the deal:
1. Get everyone in the same room and revisit the objectives of all parties. Was the buyer expecting a minimum IRR? Why is the buyer interested in the specific asset? Why is the seller selling?
2. How can the loan terms be changed to help the buyer achieve their objectives? Is an interest–only loan feasible?
3. Push the deal envelope to get to the objective of a closed sale by having all parties lay their cards on the table. Having the parties meet will avoid the possibility of any miscommunication between them resulting in a higher probability of a workable deal. Be proactive looking for solutions.
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PS – If you are ready to begin to thrive again by getting off the sidelines and putting your money to work give me a call at 602-320-6200. I see lots of deals and may have just what you are looking for.