You’ve probably heard the fable, told as a children’s story or verse, “For Want of a Nail“.  This little parable applies to real estate sales in Silicon Valley, too.

The moral of the story is that something small and seemingly insignificant can have enormous repercussions.  The end result may not be quite so dire as the loss of a kingdom, unless of course you are referring to another old adage, “a man’s home is his kingdom”.

With real estate transactions being so involved today – many different people involved at different levels, loads of disclosures, reports, documents, inspections, escrow instructions, lender requirements – and the changing rules under which the game is played, it’s not too hard to suddenly get into a situation you hadn’t seen coming.

Realize that it COULD happen.  Whether or buying or selling a house in the San Jose – Los Gatos – Saratoga area or anywhere nearby, you would be wise to know that the odds are good that at some point, some strange and unforeseen issue will rear its head and surprise you (and your agent, lender, etc.) and cause everyone involved a little stress.  

What kind of problems are these which can’t be anticipated?

• a discrepancy between the pre-sale and post-sale home inspections
• changing lending guidelines that suddenly make the buyer unqualified for the loan (for instance, after a long escrow ) or some minor change in payments or credit, and worse, this could happen with all contingencies removed
• a natural disaster, such as an earthquake, that happens while you’re in the middle of the contract (that happened to me with the Loma Prieta quake of 1989)
• Some incorrect information passed to buyers on a permit file that causes an enormous upset (and possibly expensive fixes demanded).
• the severe illness, injury or death of one of the buyers or sellers
• job loss of one of the buyers in escrow
• a fire or significant damage to the real estate being purchased
• and many more….

What can you do to prevent them?  As much as possible, we (agents, buyers, sellers, lenders, escrow officers and everyone else involved) work diligently, often using checklists and backup systems to ensure that nothing “falls through the cracks“.  Buyers are careful not to spend money on big ticket items (which would deplete their reserves) or do anything major to impact their credit.

But sometimes, no matter how much planning, effort and wisdom goes into a sale, that natural disaster, new lending regulation, an unexpected sickness or death or some other wild card wreaks havoc.

So often, it comes down not to prevention so much as to response.  How does everyone react when an unthinkable thing happens?  What do you do when a crisis hits?

The professionals involved should remain calm – getting worked up, melodramatic and screaming never help at all and often just increases the messiness of the situation.  (I have seen that done at times, even among some “top” agents.)  When a huge crisis appears, it is not the time for emotion, but for solutions.   This is when true professionals roll up their sleeves and get to work.

What can you do when a huge surprise threatens the home selling or home buying?  First of all, some basic questions need to be asked:

• how did this go wrong?  can something be “undone”?  can it be appealed?
• what are the possible outcomes?  Look at each…
• what are the potential “work arounds” or alternate solutions?
• what is the alternative which is best on all sides? how soon can it be implemented?

Initially, brainstorming solutions and trying to determine all the possible outcomes can be enormously helpful.  It’s time to solicit input from others – some of the most successful Realtors don’t stew alone when they face a big challenge, they talk to others who may have faced something similar before.  Two heads – or more – are better than one.  A  managing broker or other experienced agent can work wonders to shine a light on a new angle.  Take the time to check out possibilities rather than jump too fast into a new solution that may not be ideal.  But with enough good info, buyers and sellers can set a new course if need be.

Finding a resolution and understanding the steps needed to get back on track are key to both completing the sale and keeping everyone as happy and informed as possible in the process.

Most of the time, these unexpected events feel like the end of the world but in fact often just signal a longer escrow, possibly with slightly more expense, but the end result being the same – sellers sell the house and buyers buy the house (if both with perhaps a bit more gray hair). In my own life, we had the Loma Prieta Earthquake 2 hours after my husband and I did our final walk-through on our first home in the Cambrian area of San Jose.  We did get stuck paying for a new home inspection (to assure the lender that the house was OK) and we closed about 10 days late.  It did all work out but at the time, of course, we were a bit nervous when it was unfolding.

Home buyers and sellers would do well, when interviewing agents and lenders, to ask what kind of problems they have encountered in escrow, and how they worked to solve them.  And it’s good to also ask how to prevent problems from happening in the first place!  (I give my clients a timeline of what happens when, a checklist for writing and receiving offers and other tools to help us all to stay on track.)

ften times the “real work” of buying or selling a house, townhouse or condo is not in locating the property or negotiating the price and terms, but getting through the escrow from that point to closing. . . . And sometimes it’s after the completion of the sale!  So make sure your problem-solving team is not merely transaction oriented but relationship oriented.  You want them to be there to assist you during and after the close of the sale if need be.