Don't Let Your Client Be Pressured
Tell the client not to be pressured or rushed into any decisions by the imaginary backup offers on the subject property. Some Realtors, sellers, or other third parties want your client to believe that imaginary backup offers really exist. Also, tell your client not to become too emotionally involved in any deal. They should look at the property as though it were a typical business decision. They should put their personal emotions aside because they're spending a fortune on this financial investment. You have to make the client realize that they're not buying a CAR they're buying a HOUSE!! There's a big difference between the two. One is a normal expense everyone has to incur occasionally. The other is the biggest financial decision most people will ever make.
They should put their personal emotions aside because they're spending a fortune on this financial investment. You have to make the client realize that they're not buying a CAR, they're buying a HOUSE!!
Harry Helmsley, who was clearly a brilliant real estate investor, was quoted as saying, "The minute you fall in love with a building you're in trouble." Meaning, that if you get too emotionally attached to a property, you forget to look at it like a business decision. When this happens, you often end up paying too much for the property. You have to be objective all the time and be able to make the hard decisions and walk away from a deal at any time.
Since I do home inspections, appraisals, and have owned rental properties myself, I see this happen to potential home buyers all the time. Many people get too emotional about buying a house and they only look at the cosmetic appeal of the house or the location it's in. You have to take a step back and look at the purchase as though it was strictly a business decision. Too often people get convinced that if they don't make a high-priced offer on the house right away, then another buyer will come along and steal it right from under them. Sure, there's a potential that if the house really is a good deal then someone else will come along and buy it sooner than you will. But this happens a lot less often than most people believe, or are led to believe by some Realtors involved in the transaction.
Often a Realtor or seller will rush a potential home buyer into making an offer and/or signing contracts on a home sooner than they should. They tend to put the "fear of God" into the home buyer. They tell the buyer, "You have to make a high offer and sign the contracts right away. If you don't, someone else will buy it because there's a backup purchase offer on this house. " There are a million ways that a real estate deal can be killed. Many of those so-called "backup offers " are either imaginary or will fall through. Some reasons real estate deals fall through are: the seller and buyer don't agree on a final price and terms; the buyer or seller gets "cold feet,"; problems come up during the home inspection and/or appraisal; the mortgage loan is denied; etc. I have personally seen an awful lot of real estate deals fall through due to any number of reasons.
I had an excellent real estate attorney, named Walter Kehm, that handled all of my legal work when I first started buying rental properties. He used to say that "Real estate deals are like a trolley car, if you let one go there will be another one coming by in 20 minutes." I have found this statement to be very true from my own experiences in the real estate business. Not only in my own investments, but in the home inspection and appraisal experience I have had with my clients as well.
Many times I've had clients who decided not to purchase a home because of the problems that were found during the home inspection and/or appraisal. The seller's of these houses would not renegotiate with the buyer, and as a result, the deal never went through. In every one of these cases, the client continued to look at other houses which were for sale. Within a few months, these clients eventually found a nicer home at a better price than the deal they walked away from. They had benefited by waiting to find the best deal that they could, rather than rushing to purchase the first decent house they could find. So learn a lesson from this and don't let yourself or any of your clients be rushed into buying a house. A home is the biggest investment most people will make, so it's prudent that they take their time and think it through completely.
Also, some sellers and third parties will just wait until they find a buyer that hires an appraiser and/or home inspector that isn't as good, honest and thorough as you are. When this happens then that buyer will be going into the deal with their eyes closed. You want your client to go into the deal with their eyes open. Just because someone else might come along and pay too much for the house, doesn't mean that your client should beat them to it and over pay for the property.
You have to assist your client in their investment decision. That's what you're being paid for. You want your client to know all of the good and bad points about the subject property. Sometimes the truth hurts and people don't want to hear bad things about a house that they've fallen in love with. But that's too bad because what you're telling them is REALITY!! So let them know that your job is to open their eyes to aspects about buying a house that most other buyers don't have a clue exist. If someone else goes into the deal with their eyes closed and pays too much for the property, then all I can say is that they should have hired an "A to Z Appraiser and/or Home Inspector," like your client did!
Now at the same time, if your client is still willing to pay the same price for the house even after you open their eyes, then fine. It's none of your business what the client does after you inform them about potential costs and problems with the subject property. You've done your professional and ethical responsibility by informing them ahead of time; and that's all you're required to do. It's their money and their future, so keep your nose out of it from that point on.