1. SHIFT: Tactic 12: Bulletproofing Transactions
Making It All the Way
to the Closing
Version: 3
Revision Date: August 2008
Note: For maximum impact all attendees should have their own copy of SHIFT Tactic 12: Bulletproofing Transactions.
© 2008 Keller Williams Realty Inc.

2. SHIFT: Tactic 12: Bulletproofing Transactions
Main Ideas
Perspective
Inspections and Repairs
Appraisals
Loan Approval and Funding
Other Contingences
Co-oping and Communication
Deadlines
Bulletproofing Strategies
Review the topics you’ll cover in this training class.
© 2008 Keller Williams Realty Inc.

3. SHIFT: Tactic 12: Bulletproofing Transactions
Perspective
The Issue
“Owners feel like they are selling too low, and buyers feel like they are paying too much.”
Martin Bouma
Ann Arbor, Michigan
In a buyers’ market, homeowners may feel like they are selling too low and buyers may believe they are paying too much. When that happens, they are less likely to be agreeable in future negotiations.
Each party feels as if they have already made concessions and now it is time for the other side to give up something of value.
The agent’s job is to keep the deal together and help buyers and sellers reach win-win solutions.
When a deal falls apart, nobody wins.
Pages 7-8
© 2008 Keller Williams Realty Inc.

4. Perspective (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Perspective (continued)
The Challenge
In this market, a “yes” on a contract is not as solid as a “yes” in another market.
According to Gary Keller, some buyers believe every step in the transaction is an opportunity to renegotiate without ethical, moral, or legal risk.
Buyers know there are a lot of houses available and they have an advantage in negotiations.
In this market, a “yes” on a contract can mean “yes for now, but I might change my mind when the inspection or appraisal is done.”
Agents need to anticipate problems and be prepared to resolve them.
© 2008 Keller Williams Realty Inc.

5. Perspective (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Perspective (continued)
The Solution
Be aware of the most common problems.
Have good solutions and scripts.
Avoid problems by addressing common concerns before they arise.
Maintain good and frequent communication with all parties.
Discuss the things an agent can do to minimize the number of transactions that fall apart.
© 2008 Keller Williams Realty Inc.

6. Perspective (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Perspective (continued)
Six Major Issues—Contract to Close
Inspections and Repairs
Appraisals
Loan Approval and Funding
Contingencies
Co-op Agent
Deadlines
© 2008 Keller Williams Realty Inc.

7. SHIFT: Tactic 12: Bulletproofing Transactions
Inspection and Repair
“I’m finding that we’re getting big laundry lists from people wanting everything done to the house, and if you don’t do just about all of it, they’ll walk.”
Sharon Hamilton
Santa Rosa, California
In a buyers’ market, buyers have the upper hand in negotiations. Be aware of what repairs sellers are typically making in your market and what repairs buyers are requesting and getting.
© 2008 Keller Williams Realty Inc.

8. Inspection and Repair (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Inspection and Repair (continued)
Conversations with Customers
Sellers
Prepare sellers for what to expect in your market.
Acknowledge their feelings and concerns.
Ask if sellers are willing to risk losing the buyer.
Suggest a pre-inspection to prevent unexpected repairs.
Sellers who have recently been in a sellers’ market may have unrealistic expectations of what they need to do.
© 2008 Keller Williams Realty Inc.

9. Inspection and Repair (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Inspection and Repair (continued)
Conversations with Customers
Buyers
Recommend inspectors you trust.
Educate buyers about where you are in the process and what comes next.
Remind buyers that inspectors document everything they see.
Help buyers focus on the big picture and important issues.
Real estate agents play an important role in the inspection process, especially for first-time home buyers.
It is important to let buyers know what to expect. First-time buyers may not realize that inspectors document everything they see. The length of an inspector’s report can scare buyers.
Make sure buyers know the purpose of an inspection is to uncover any major problems that are not apparent as people walk through the house.
Help buyers focus on important issues and avoid getting hung up on minor flaws.
© 2008 Keller Williams Realty Inc.

10. Inspection and Repair (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Inspection and Repair (continued)
Attend Inspections
Your Goals
Answers all your customer’s questions.
Know what’s on your customer’s mind.
Keep small issues small.
Provide vendor referrals (if needed).
Guide buyers through the next steps.
Many top agents advise against attending an entire inspection. However, they often show up at the end. This provides an opportunity to do several things:
Review the inspector’s report with your buyer.
Answer all the buyer’s questions.
Find out what the buyer is thinking.
Keep things in perspective (focus on big issues and keep small issues small).
Provide vendor referrals.
Let buyers know what will happen next.
Don’t let the inspection become a reason to back out of the contract!
© 2008 Keller Williams Realty Inc.

11. Inspection and Repair (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Inspection and Repair (continued)
Negotiation
Find out how much repairs will cost.
Enlist the other agent as your ally.
Adopt a positive mindset: “Let’s make a deal!”
“Let me help with the cost of that repair.”
“I’ll pick up one-third of that.”
Before negotiating for repairs, it’s a good idea to find out how much the repairs will cost because it is easier to agree to a repair when you have a price estimate.
Work productively with the other real estate agent to find a solution that is agreeable to the buyer and seller.
Maintain a positive mindset and always look for a way to make the deal work.
If all else fails and you want the deal to close, do what it takes to keep negotiations going by offering to help with the cost of the repair.
© 2008 Keller Williams Realty Inc.

12. Inspection and Repair (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Inspection and Repair (continued)
Home Warranty
Home warranties alleviate buyers’ worries.
In the future, when a repair is needed, new owners call the warranty company rather than you.
Home warranties can alleviate some buyer anxieties.
If the seller has not already purchased a home warranty you can try to negotiate for it. Alternatively, a buyer can purchase a home warranty, or the real estate agent can purchase it.
A home warranty gives the buyer peace of mind knowing that if something goes wrong with a covered system or appliance, it will be replaced within the first year of ownership.
A home warranty is good for the real estate agent because new owners have a phone number other than yours to call when a repair is needed in the future.
© 2008 Keller Williams Realty Inc.

13. Inspection and Repair (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Inspection and Repair (continued)
Negotiating Inspection and Repair Issues
What are your best practices for resolving inspection issues?
Ask agents how they deal with challenging inspection and repair issues.
© 2008 Keller Williams Realty Inc.

14. SHIFT: Tactic 12: Bulletproofing Transactions
Appraisals
What can a real estate agent do to make sure the buyer gets an adequate loan to make the purchase?
In a market where prices are falling, the lender is primarily concerned that the property that is worth the full amount of the mortgage.
To increase the chance of getting an appraisal that will lead to funding:
Find out the name of the appraiser.
Give the appraiser any pertinent information you have, such as improvements that may not be apparent.
Let the appraiser know how you determined your offer.
Give the appraiser your CMA that demonstrates your offer is a fair price compared to similar recent sales.
Answer the appraiser’s questions.
© 2008 Keller Williams Realty Inc.

15. Appraisals (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Appraisals (continued)
Low Appraisals – Sellers
Do a thorough CMA.
List the house at an appropriate price.
Have an appraisal done if there are no comps.
There are things the listing agent can do to decrease the likelihood of a low appraisal:
Do a thorough CMA.
Help the seller decide on an appropriate listing price.
If there are no recent comps (e.g., if it is a custom home or if there are no recent sales), have an appraisal done before setting the price.
© 2008 Keller Williams Realty Inc.

16. Appraisals (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Appraisals (continued)
Low Appraisals – Buyers
Funding Options
Additional down payment from the buyer
Financial gift from parents/family
Second mortgage
Seller-assisted options
What are the options when you get a low appraisal?
Go back to the seller and try to negotiate a lower sales price.
Find out if the buyer can come up with additional funds for a down payment.
Obtain a second mortgage.
Investigate seller-assisted financing options.
If none of those options work and there is an appraisal contingency, your buyer may have to opt out of the contract within the specified period of time after receiving the appraisal.
© 2008 Keller Williams Realty Inc.

17. Appraisals (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Appraisals (continued)
Dealing with Appraisals
What appraisal problems have you encountered or heard about in your area?
How can the problems be avoided?
Ask about problems related to low appraisals. Brainstorm solutions with the class.
© 2008 Keller Williams Realty Inc.

18. Loan Approval and Funding
SHIFT: Tactic 12: Bulletproofing Transactions
Loan Approval and Funding
Regardless of which side you represent, make sure the buyer uses a reputable and trustworthy lender.
These days there are many ways funding can fall through:
The mortgage product is no longer available.
The mortgage company goes out of business.
The buyer no longer qualifies for the loan.
Regardless of who you represent, make sure the buyer uses a reputable lender or has a backup approval from someone you trust.
© 2008 Keller Williams Realty Inc.

19. Loan Approval and Funding (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Loan Approval and Funding (continued)
Buyer Side
Make sure your buyers are preapproved for a mortgage loan before showing them houses.
Offer names of two or more reputable lenders.
Submit a parallel application for backup funding when you don’t know or trust the buyer’s lender.
Advise your buyers on keeping their finances in good shape.
When you represent buyers, show houses after they are preapproved for a mortgage. That way you avoid showing houses they can’t afford.
Suggest two or more lenders—never just one. Discuss why this is important.
Submit a parallel mortgage loan application when you don’t know or trust the buyer’s lender.
© 2008 Keller Williams Realty Inc.

20. Loan Approval and Funding (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Loan Approval and Funding (continued)
Prequalified vs. Preapproved
Prequalified—the buyer may receive a loan for a certain amount based on minimal information provided to lender.
Preapproved—the buyer provides detailed financial information to the lender and the lender pronounces that the buyer is most likely to receive the loan.
Discuss the differences between prequalified and preapproved.
Discuss how best to communicate these differences to buyers so they understand the importance of preapproval.
© 2008 Keller Williams Realty Inc.

21. Loan Approval and Funding (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Loan Approval and Funding (continued)
Seven Don’ts of Mortgage Funding
Don’t change your employment status.
Don’t make any major purchases.
Don’t increase your credit card debt or miss any payments.
Don’t change bank accounts or make undisclosed large deposits.
Don’t apply for a credit card, cosign a loan, or make a credit inquiry.
Don’t spend money you have set aside for closing—not any, not ever.
Don’t delay in providing all paperwork asked for by the mortgage company.
Advise against actions that could jeopardize a loan.
© 2008 Keller Williams Realty Inc.

22. Loan Approval and Funding (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Loan Approval and Funding (continued)
Other Funding Issues
Parallel Applications
Documentation Problems
Lender Doesn’t Approve
Buyer Credit Issues
Discuss these other funding issues.
© 2008 Keller Williams Realty Inc.

23. Loan Approval and Funding (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Loan Approval and Funding (continued)
Anticipating and Avoiding Funding Problems
What financing problems have you encountered?
What do you do to avoid funding problems?
Ask about financing problems agents have encountered and what solutions they have used that allowed buyers to go through with the purchase.
© 2008 Keller Williams Realty Inc.

24. SHIFT: Tactic 12: Bulletproofing Transactions
Other Contingencies
Sale of Buyer’s House
Additional Approvals
Clouded Title
© 2008 Keller Williams Realty Inc.

25. Other Contingencies (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Other Contingencies (continued)
Avoiding Contingencies
What other contingencies have you encountered?
What solutions worked?
Ask how to avoid contingencies.
© 2008 Keller Williams Realty Inc.

26. Co-oping and Communication
SHIFT: Tactic 12: Bulletproofing Transactions
Co-oping and Communication
Key Players
Escrow officer
Lender
Appraiser
Real estate lawyers
Title company
Other real estate agent
Buyers
Sellers
© 2008 Keller Williams Realty Inc.

27. Co-oping and Communication (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Co-oping and Communication (continued)
Buyer’s Financial Situation
Follow the Seven Don’ts of Mortgage Funding
Buying a house is a big decision, involving large amounts of money. It is a decision most people don’t make very often, and one they will probably live with for at least a few years. Buyers don’t want to make a mistake.
© 2008 Keller Williams Realty Inc.

28. Co-oping and Communication (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Co-oping and Communication (continued)
Seller’s Financial Situation
Gather information:
When the property was purchased
Amount of the loan
How much the seller owes the lender
Whether there is a second mortgage
“Never assume the seller’s agent has asked all the right questions of the seller.”
Terry Moerler
Westlake Village, CA
Whether you represent the seller or the buyer, ask questions to determine the seller’s financial situation and ability to sell the property.
A simple and direct question is, “Are you up-to-date on your mortgage payments?”
© 2008 Keller Williams Realty Inc.

29. Co-oping and Communication (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Co-oping and Communication (continued)
Escrow Officer
Stay in communication as soon as contract is signed
Surveys and Vendors
Avoid misunderstandings and differing expectations
Ask questions and get things in writing
Communicate clearly and often
© 2008 Keller Williams Realty Inc.

30. Co-oping and Communication (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Co-oping and Communication (continued)
Bulletproofing with Communication
What questions should you ask to avoid problems in the contract-to-close process?
© 2008 Keller Williams Realty Inc.

31. SHIFT: Tactic 12: Bulletproofing Transactions
Deadlines
Avoid Missing Deadlines
Negotiate closing date
Negotiate occupancy date
Confirm inspection and repair appointments
Follow a contract-to-close checklist
Missed deadlines can cause transactions to fall apart.
Discuss ways to avoid missing deadlines.
© 2008 Keller Williams Realty Inc.

32. Deadlines (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Deadlines (continued)
Meeting Deadlines
How do you keep yourself organized and on track with respect to deadlines?
Ask how agents keep themselves on track.
© 2008 Keller Williams Realty Inc.

33. Bulletproofing Strategies
SHIFT: Tactic 12: Bulletproofing Transactions
Bulletproofing Strategies
Proactive Prevention
Outcome framing—what do you want to achieve?
Set expectations—what do we realistically need to consider?
Prepare alternatives—what will we do if … ?
Reassure—we’re on track and doing fine.
© 2008 Keller Williams Realty Inc.

34. Bulletproofing Strategies (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Bulletproofing Strategies (continued)
Reluctant Buyer
“Have a plan in place to deal with what you know is going to happen.”
Dave Jenks
Keller Williams Realty International
© 2008 Keller Williams Realty Inc.

35. Bulletproofing Strategies (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Bulletproofing Strategies (continued)
Buyer’s Remorse Triggers
News reports that make them absolutely sure they have made the worst decision of their life.
Friends who tell them they are nuts for buying a home now.
Well-meaning family members or friends who say, “You paid THAT MUCH for your house?”
Discuss how to let buyers know about these triggers for buyer’s remorse.
© 2008 Keller Williams Realty Inc.

36. Bulletproofing Strategies (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Bulletproofing Strategies (continued)
What You Do
Mark the moment of victory.
Write down how thoroughly you considered everything in the market and why this house is THE ONE.
Prior to making an offer, do a CMA. When your buyers have data to show they are paying a fair price, they won’t have so many worries about paying too much.
Celebrate a signed contract because a celebration anchors a decision.
Document the purchase decision by writing down all of the reasons why the house your buyers chose is a great one for them.
If your buyers don’t come up with reasons right away, start the list for them.
When they come up with a reason why their house is a great buy, put a star next to it.
Make a copy of the list and give it to your buyers.
© 2008 Keller Williams Realty Inc.

37. Bulletproofing Strategies (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Bulletproofing Strategies (continued)
Antidote for Buyer’s Remorse
“You have to constantly resell buyers on their decision.”
Martin Bouma
Ann Arbor, Michigan
You should frequently reassure buyers that they made a good decision.
The list of reasons why they made a good purchase decision will help them combat buyer’s remorse when you are not around.
© 2008 Keller Williams Realty Inc.

38. Bulletproofing Strategies (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Bulletproofing Strategies (continued)
Seller’s Remorse
Do a CMA.
Remind sellers of their motivation to move.
Remind sellers about their destination.
Discuss the risks of starting over.
When sellers fear they are selling their home at too low a price, there are a few things you can do and say to help them realize they should go through with the sale.
Do a CMA to help them have a realistic understanding of current prices.
Remind them of their reasons for moving.
Remind them of what they have to look forward to when they move.
Discuss the risks of starting over, including time and cost.
Give sellers an opportunity to vent their frustrations. Be a good listener.
© 2008 Keller Williams Realty Inc.

39. Bulletproofing Strategies (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Bulletproofing Strategies (continued)
Close as Soon as Possible
Reduce the time buyers and sellers have to second-guess their decision.
Encourage the earliest possible closing date to reduce the time for buyers or sellers to change their minds, especially when prices are dropping.
© 2008 Keller Williams Realty Inc.

40. Bulletproofing Strategies (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Bulletproofing Strategies (continued)
Early Response—Stay on Track
Constant communication
Inspecting expectations
Problem solving
Contract-to-Close tracking
When you maintain frequent communication with all parties in a transaction, you will become aware of any problems as soon as they arise and will have time to find acceptable solutions.
Don’t make any assumptions!
© 2008 Keller Williams Realty Inc.

41. Bulletproofing Strategies (continued)
SHIFT: Tactic 12: Bulletproofing Transactions
Bulletproofing Strategies (continued)
Handling Buyer’s Remorse
What works when your buyers change their minds about buying a house?
Ask about best practices for maintaining good communication in the contract-to-close process.
© 2008 Keller Williams Realty Inc.

42. SHIFT: Tactic 12: Bulletproofing Transactions
The Bottom Line
Communicate often with all key people.
Spend plenty of time with your customers.
Handle or closely oversee the contract-to-close process.
Anticipate problems and take preventive action to avoid them.
Understand the mindset of buyers and sellers.
Look for creative solutions.
Never give up!
Ask agents to share their advice for keeping deals together in the contract-to-close period.
© 2008 Keller Williams Realty Inc.

43. Productivity Boosters
SHIFT: Tactic 12: Bulletproofing Transactions
Productivity Boosters
Help Buyers Understand the Process
Don’t Forget Closing Details
Communicate with Your Customers
The ProManage/TOP PRODUCER contact management system has many tools to boost your productivity.
For more information visit the ProManage site on the KWU Intranet: Click on the eAgentC tab, and then click on ProManage/TOP PRODUCER.
© 2008 Keller Williams Realty Inc.

44. SHIFT: Tactic 12: Bulletproofing Transactions
My Action Plan
Don’t put away this guide without developing a plan to put what you have learned into action!
Refer to the Action Plan on pages of the guide to assess your strengths and areas for improvement.
Write down steps you will take to improve your skills—complete it, share it, and commit to it!
Direct participants to fill out their Action Plans on pages of the guide. Ask them to share their commitments with the class.
© 2008 Keller Williams Realty Inc.

45. Take the other courses in the SHIFT Tactics series!
SHIFT: Tactic 12: Bulletproofing Transactions
Take the other courses in the SHIFT Tactics series!
Gaining Mind over Market
Upshifting Your Lead Generation
Seller Pricing Strategies
Seller Staging Strategies
Lead Capture and Conversion
Internet Lead Capture and Conversion
Creating Urgency to Buy
Expense Management
Effective People Leverage 
Short Sales, Foreclosures, and REOs
Financing Solutions
© 2008 Keller Williams Realty Inc.

46. SHIFT: Tactic 12: Bulletproofing Transactions
Thanks for being here!
Please complete an
evaluation for
this session.
Emphasize the importance of filling out evaluations.
© 2008 Keller Williams Realty Inc.