You might be surprised to know how many different theories there are within the real estate sales industry about when to publicly declare that a property is ‘under contract’ or in fact, sold’.

How an agent handles this process may tell you a lot about whether they are more interested in their image or whether they truly have your best interests at heart.

Let me explain…

Normally, when an agent secures a sales contract on a property, there are often conditions that need to be fulfilled prior to the contract being declared ‘unconditional’ – conditions usually include a building and pest inspection and a finance approval.

Once these conditions (and any other conditions that may be relevant to the sale) are fulfilled, the property becomes ‘unconditional’ and in my experience, at that time, there is a 99.8% likelihood that it will proceed to settlement.

Over the past 12 months, we’ve seen an increasing number of real estate agents declare the property ‘under contract’ online and even placing an ‘under contract’ sticker on the ‘For Sale’ sign in front of the property.

It would appear that these agents are very keen to let everyone know that the property has a contract on it.

Here’s the problem – declaring to everyone that the property has a contract on it will certainly bring the number of fresh enquiries to a grinding halt…and if you’ve been reading my blogs for a while, you’d know that building and pest inspectors are now more fearful of future litigation and as such, are very conservative in their approach, and add this to the fact that financial institutions only need half a reason to decline finance (remember my story of the daily Subway purchase for lunch being the reason for a finance rejection) because of the recent Royal Banking Enquiry.

More so than ever before, there’s an increasingly higher percentage of contracts written that are not proceeding to settlement.

Should a contract terminate (and it be publicly known that it has terminated), what do you think the general perception of the buying public would be?

I can tell you that buyers will naturally jump to the conclusion that there must be significant building and pest issues with a home rather than assume that the previous buyer has been ordering a little too much take-a-way food for the banks to allow.

So the online banner that says ‘Under Contract’ is removed and even worse, the ‘Under Contract’ is peeled off (and occasionally leaves a portion of the ripped sticker behind or a greasy residue so that it can be seen that there was some sort of sticker on the property at some point in the campaign).

And what do you think this does to the future prospects of a sale?

If nothing else, it certainly instils a level of fear in a buyer’s mind…and with the market already a little ‘edgy’, this is the last thing that any seller needs!

Here’s an even worse scenario…the contract falls over and the heading on the online advert is changed to ‘Contract Crashes – Back on Market’.

Fantastic news! Just in case there were a few new buyers in the market that might have missed the fact that there’s been a contract that has just fallen over, the clever agent will make sure that no-one could possibly have missed it!

I can guarantee you this – in more than 90% of cases, any property contract that has fallen over (and was publicly shown that it had fallen over) achieves less money second time around.

Even if the subsequent buyers love it, they will be a little more cautious and conservative given the property’s history.

So, when is the best time to declare a property as ‘Under Contract’?

Our team won’t declare it until the property is ‘Unconditional’ in all respects.

In fact, we often say to sellers “Don’t tell anyone that you have a contract on it as word travels fast and we want to keep receiving fresh enquiries so that we have a back-up plan in case the worst happens and the buyers don’t proceed.”

Any agent that doesn’t do this must start completely from scratch when their seller’s contract is terminated and at this point, the sales’ momentum has normally dried up.

This could mean having to pay more fees to the online real estate portals to bring the property back towards the top of the list and effectively, the seller has paid a decent portion of their online marketing budget to the agent that has used the online space to ‘self-promote’ their own sale…sometimes at the expense of the owner but more importantly, at the expense of what the property might only now achieve in any future sales.

So, when you’re next considering which agent to use, it’s vitally important to choose an agent that places more importance on you and your property than on their own egotistical profile.

Finally, we’d like to wish all the Mum’s out there a very Happy Mother’s Day this coming Sunday!

There’s just so much that the Mum’s in our lives do for us and I know that I’d be lost without my Mum…helping me juggle appointments, looking after my kids and her Grandkids amongst other things! Thank-you Carolyn – words cannot express how much I appreciate you and what you mean to me!

Please spoil your Mum this Sunday as they truly deserve to be pampered.

So, from all of us at ‘The Michael Spillane Team’, we hope that your wives, partners, Mums and Grandmothers have a very Happy Mother’s Day!

Until next week…Happy Listing & Happy Selling!