By Michael Edlen
Special to the Palisades News
We are frequently asked what kinds of things can come up during transactions that might result in an escrow falling apart, how often it occurs, and what the agents need do to keep the escrow together.
Considering the length and complexity of any real estate transaction, there are numerous opportunities for things to go wrong. Even in a robust market such as we have had for four years, escrow falls out 20-25 percent of the time.
If the seller does not have a solid backup buyer lined up, it can be costly to have to start the marketing process all over. This is due to the difficulties in generating “new- listing energy” weeks after having already begun the process.
Real estate agents work with a wide variety of issues to keep escrows intact. Those with a long-term perspective have the added benefit of wisdom that comes through experience, and their perspective is invaluable.
There are several skills agents must have developed to accomplish long-term perspective, consistently and successfully, without being attached to the outcome. These include being clear and honest thinkers, resourceful problem solvers, emotional buffers and supportive therapists. Communication skills required include being detailed, focused on all issues, patient and keeping a sense of humor.
Any experienced agent knows that marketing or locating properties is probably less than 25 percent of the work. The majority of effort during a transaction is making sure it closes: the agent is responsible for coordinating a complex series of events in order to succeed.
This involves working with many service providers: escrow officers, title company people, pest control inspectors, retrofitters, building inspectors and supplemental inspectors of sewer lines or chimneys.
Of course, the agent also handles federal, state, county and city disclosures, plus other required documents. There are more than 30 pages of contract and disclosure forms.
Incorrect or inept handling of any aspect of the transaction can cost the client thou- sands of dollars in the negotiation process, or far worse, later court action.
Agents who use detailed checklists and someone to monitor all of the steps required to close the escrow are best able to prevent problems.
Below are examples of unexpected escrow issues:
1. Non-disclosed, non-permitted additions to a home.
2. Boundary lines not being where seller claimed (it is far too easy to assume that a fence or wall is on the property line).
3. Seller “forgot” to mention periodic underground water below the house.
4. Seller’s insurance claim a few years ago for water damage (such as from an over- flowing toilet) is revealed.
5. Seller not disclosing that they knew someone died in the home (as required by law).
6. Seller camouflaged musty smell with candles and air fresheners and buyer subsequently discovered mold.
7. Seller not mentioning that the house next door is soon-to-be a new home construction site.
8. Seller reacts defensively to some opinions of the buyer’s inspector.
9. Buyer’s resentment after seller’s denial of access to the property during requested times. 10. Buyer or seller reactions to incomplete or inaccurately communicated information by one of the agents.
11. Unstated assumption by buyer that termite removal is seller’s responsibility, or that seller must correct defects, alter unsafe conditions, replace missing or broken fixtures, etc.
12. Agent does not explain existence and potential significance of CC&R’s, which may prevent an addition to the house that buyer intended.
13. Well-meaning relatives cannot believe the price tag.
The list of possible reasons for an escrow falling apart is endless. The loss of an escrow after two or more weeks may be disappointing to a seller. There is also a significant loss of marketing momentum during the escrow period. And even if the issue or situation does not become a “deal breaker,” the result almost always includes an increase in stress levels for all concerned!
When you decide to put your home up for sale, don’t let your transaction become the one of every four that falls out. Be sure to consider selecting an agent who has been “seasoned” by successfully closing many escrows.
Michael Edlen and his team have sold more than 1,300 properties using time-tested systems and checklists to minimize the “fallout ratio.” For more information, visit TheEdlenTeam.com, or call 310-230-7373.