Agents Decoded: How to train agents for when deals fall through
Most real estate training is based on the assumption that all deals close. When they don’t, too many agents are ill-equipped to handle it.
The direction of your business depends on decisions you make every day. Agents Decoded can help you by presenting the perspectives of seasoned pros who have been there, made mistakes, and found success.
Recently, one of my newer agents called me, sounding almost traumatized.
She had been present for a home inspection when the wheels came off the transaction before the session even started. It was an unexpected curveball: The buyer called the assessor's office and was told the square footage was 1,000 sq. ft. less than what was in the MLS. My agent was caught so off guard that she couldn't provide a cogent response, and the entire buyer party — the principals, their agent, a few family members who accompanied them, and the inspector — were gone in 10 minutes.
The seller was aghast, the agent was gobsmacked, and in the postmortem we clearly saw how the situation could have been handled better.
If you're curious, the assessor's office is not the final authority in New York on livable square footage. That's the building department. The assessor simply doesn't apply tax on basements, even when they are finished. But it was too late to change the emotional momentum of a nervous buyer on a purchase not far under $1 million.
The downstream ripple effect was also a rough ride. The seller called us several times in distress, and the agent was so upset about her non-answer in the moment that she asked a more experienced agent to step in going forward.
The whole experience got me thinking. For decades, my approach has been to commiserate with the agent and do damage control with the client on the fly — but we've never trained agents on any standard procedures or protocols for when deals go south. We react. We have no plan.
The industry needs a periodic fire drill.
How to help agents plan for the unexpected
I've had plenty of experience with transactions falling through. After examining the best ways to handle those situations over the years, I've come up with this plan:
Step 1: Isolate the cause of the issue. Is it a problem with the buyer? Is the listing agent the cause, or is it something beyond anyone's control, such as a fire, bank failure or job loss?
Doing this immediately will help the agent deal with the drain on focus and bandwidth that occurs as a result of the shock, disappointment and worry. Rather than have their mind race, this gives them a specific task to focus on, which can begin the sequence of possibly saving the deal, or at least minimizing the client's stress.
Step 2: Triage the client's reaction, even if the deal can be salvaged. Clients often need hand-holding in a smooth transaction, let alone during one that's in jeopardy. The "five stages of grief" come into play here: denial, anger, bargaining, depression, acceptance.
When a client attempts to negotiate a solution, it means they are past the intensity of the denial and anger stages. This requires empathy and a cool head to reassure the client that a plan is in place. They need to know that this happens sometimes, we have a response, and this, too, shall pass.
Step 3: Formulate a response and deploy it with care. If the transaction can be salvaged, create a plan and get to work. And if the sale has fallen through irretrievably? A price revision, an open house, and a fresh walkthrough video might be in order.
If your MLS allows reverse prospecting, send an email blast out to all matches and let them know the property is available and the seller is motivated. If you're working on the buy side, a fresh list of matching properties should help. Perhaps obtaining an updated pre-approval for a higher loan amount will improve the buyer's odds of getting an offer accepted.
Step 4. Conduct a postmortem. Review what happened, what could have been done to prevent the issue, and what lessons can be incorporated going forward. This process has to be unclouded by trauma. What that means is we should be careful about any edict that uses the word "never," unless that strengthens a best practice rather than leads us to avoid a certain type of sale or client.
"I will never sell another bank-owned foreclosure" is ill-advised. "I will never sell another REO and waive inspections" might be more appropriate. Smart postmortems make us better and more knowledgeable — and experienced, smarter agents sell more property.
Standardize this process at your firm
Discuss the four steps above often in your office, and conduct drills on Step 1. Practicing how to handle deal-breaking situations will help maintain composure when the real thing happens.
Incorporating a true standard operating procedure for dead and dying deals should maximize the opportunities to salvage at-risk transactions. Even in the worst cases, it should be a learning experience for both the clients and the agents involved.
In the long run, a sensible contingency plan will minimize risks, rather than letting them cloud relationships or sink deals.
J. Philip Faranda is a manager and associate broker at Howard Hanna | Rand Realty serving Westchester and Putnam Counties, just north of New York City. He was previously a broker-owner at J. Philip Real Estate, the top independent brokerage in the two counties by transaction sides, which he founded in 2005. He also writes a real estate blog which has been cited by major media outlets. The views expressed in this column are solely those of the author.