Fallen Sales, Failed Contracts, Deals Fallen Through (DFTs), or Transaction Fallen are a few names designated to real estate contracts that fail to make the closing table. This session is Part II of Peter and David’s video about “Fallen Deals are like Fallen Angels.” In this session, follow the journey with Mary Smedley, Branch Manager for Michael Saunders & Company, and Peter McGarry of McGarry Properties to discover why keeping a deal together matters. Mary’s insights on the many benefits gained from a strategy to save real estate deals present compelling reasons to follow this metric. We also discuss if technology has a role to help the broken wings back to flight. Please sit back and enjoy it!
I’m Mary Smedley my background as I’m managing Broker for the Englewood and Boca Grande Offices.
I love management, I’ve been in over 25 years.
My favorite part is coaching my agents to be the best that they can be to drive them up on levels and to really work on their why and achieve to be amazing. And I love every, I love every bit of that aspect of my job.
I am so happy to be with you, guys.
We’re so happy to see you, too, Mary.
It’s been a long time since we’ve had a chance to chat, and this is, this is a great topic to talk about.
Peter, Tell us a little bit about yourself.
Well, I’m Peter McGarry, I’m a partner in McGarry Properties, and, basically, we specialize in real estate, income properties, but primarily, our purpose today is to be talking about best practice. Best practices specifically, our topic today is in this, rather, illusive areas of deals that fall through or DFTs to sound brilliant.
But a DFT is one of these areas where, across the industry we see. What do you see, Dave in terms of percentages of …?
Yeah, across the industry. Between 7% to 14% every month of deals fall through.
And Mary is actually has a great level of expertise in the value of DFTs. And, so I thought we just kind of get started with.
And by the way, I am not driving, I am stationary in my automobile.
That’s why my hands are doing this.
No-one’s at risk with me on the road.
Why don’t you take us home about your philosophy of DFTs and also, as a quick aside, that I’ve actually heard recruiters and people actually malign, the manager’s job of field doctoring.
And if you don’t mind, explain why you think it’s important to be involved in those equations?
I would be happy to.
So, DFTs, fallen Angels, the magic unicorn, whatever you wanna call them, I think it is an opportunity for agent growth when they are looking at a deal.
Looking at trying to get it. Because the buyer wants to buy the seller, wants to sell, and then all of a sudden, some things happen in-between figuring out a solution by listening and focusing on keeping those together.
In my office compared to last year, I had a 50% reduction because we focus on what was the trend and it’s different in every office.
So, the trend on how these, is it repairs. Is it appraisals? Is it financing? Is it proof of funds?
But really focusing on listening to the agent and making sure that that agent is setting up for success and coaching them, so that they can get better at their trade.
That’s my favorite part, I never liked to lose. Gotta put it together.
Keep it together, and close it.
How do you go about coaching?
No, no, that was perfect. I was leading down that pathway. Again, how do you go about coaching and using this as your understanding of how deals fall through, and again, you don’t have any statistics or facts.
These are all pretty much qualitative, it’s based upon your experience of what you’ve seen over the years, right?
What do you do?
How do you coach up your agents through this? And how do you get them to understand that, know, when they see something going wrong with the deal that they can take certain actions.
Well, the culture at my offices is we are very collaborative, basically that boils down to how needy I am and how I need to be involved in the process, just kidding!
When there is an issue with a sale and the agent feels that they can come to me. They talk to me about it and we identify what the steps are necessary to take. That is dependent on each manager and each trend, if they’re tracking it, I think number one, they need to trend or they need to track what the trends are.
In my office, it’s always about repairs.
Of course, the “As-Is”, doesn’t always mean “As-Is”, because they give a laundry list of repairs, financing or proof of funds, and appraisal.
So what I tell them is, I’m a big one, because of my father in the military, about debriefing. Every sale, I get with the agent.
So, it’s a constant retention process.
How can we debrief and make this deal better? What are the, the red lights that come up? Red flags that come up during the process? You know, does the buyer see something that they think is already going to be a problem? Let’s, let’s tackle it now. Let’s set the expectations.
If you set the expectations and communicate with the other agent, then, you can find a solution by listening, and keeping it simple.
Most people don’t listen, and they want to take it into their own hands, “Oh, they’re not going to do that.”
Well, let’s, let’s hear. Because sometimes, in our minds, it might be something major, and it really isn’t. It might be, “oh, the house is falling down.”
But guess what?
They, they only want to pay attention to a GFI, where we can help you with that.
That’s basically, you know, it’s just the trends.
It’s really having that conversation with the agent.
You know, my office has grown when it was a smaller office. I used to look at every single deal that crossed my desk and I would call the agent, “Congratulations, This is awesome.”
“Do you feel that there are any things that come to your mind that might be a problem moving forward?”
“It might be dealing with the other agent.”
“It might be that you have a difficult buyer, a difficult seller, What is the hotspots on that?”
We talk about it. And they love that coaching. Because when they want a solution, well, “what would you think we would need to do?”
So that when the problem happens, they know what to do.
A very proud of them because our DFTs, have declined by 50% from year to date, today, from last year. And I’m very, very proud of that because that’s been able not only to add that volume to the office, but more importantly, the Agents’ Paycheck.
When you talk about loyalty. There is nobody in the business, not too many, that instead of always pushing paperwork, really, get in and care about their agents being proactive, preventative, and you know when you keep a deal together and that Agent gets the paycheck, guess what?
They are so happy.
They are my best recruiters from my office, because you know, what? They know how to deal. And, you know, what, the doctors in.
So they are like “Hey!”. Do you know what the best part is? Is that, they share that winning formula with everybody else?
So, we have a lot of angels still to save, and a lot of wings to make sure that they’re flying on these deals. But that’s like my favorite part is finding a solution to something.
When somebody tells me No. Alright, then that is not a real no.
Let’s figure out how to make this a yes, and it’s not our yes, it’s for the customers who we transactionally represent?
Exactly, exactly!! Just to put some context for our listeners: How many agents do you have in your office?
I have 40; I have 40 Agents in my Englewood office and 15 in my Boca Grande office. Yeah!
And, why did you start looking at DFT’s as being something that was very important to you? I mean, what, what was the impetus to say,
“Hey, look. There’s something going on here. I need to really look at this and do an analysis and, and figure out what’s going on.”
What got you to go down the pathway to be cognizant that DFT’s are an important part of your business?
You know, we have to, as managers, we have to sign off on cancellations.
And where it took me was, I was noticing that, you know, there are some months where you’re behind on your volume.
And I see a lot of agents so busy, and in meetings they would say, “you know, I have had this go down.” I thought, “Man, in one meeting I had like five agents.”
I said, “You know what? I need to start looking at this.” So, three years ago I started really look at the DFT.
And I noticed that, each year it got higher and higher, and I’m like, “Holy moly, how did I miss this?” And, what it did was, you know sometimes it would go up to 10 million a month, in failed deals and, you know, what? My office generally, you know, with those numbers, that was horrific.
Wow! That is a lot.
And so, I thought, “what is the case?”
Now, granted, they would resell their properties or have the buyer buy another property, but guess what?
I went to those agents, because I saw who the agents were.
No, I didn’t tell everybody. But those that have the failed sales, I’m like, “Let’s talk about this.”
You know, it’s much more difficult to go and have a buyer do a new one or have a new offer or sell or reselling it. It’s not that easy, or glib to say, oh well that we’re gonna sell it again.
Let’s focus on what happened during that sale. Because, you could have already move on to the next one, in building somebody’s business, and at the end of the year by focusing on that, those agents are up for awards are those agents that wanted their vision of maybe planning a surprise trip for their loved ones, or going to Disney, or getting a new car, or paying off their mortgage.
With those additional units, they were able to achieve their goals.
And the best part for me was, I got to see them burning that note, I got to see them driving around in their cars, or seeing the pictures of them on a beautiful vacation with their family.
Whatever their “why is”, it made such a difference and why wouldn’t we focus on what we have in hand, then to look at another thing.
It’s like prospecting. You’re not going to go out and find new prospects. Why don’t you communicate with the ones you know, right?
Same thing with failed sales: and what a difference in the detailed work from my agents. They have grown into such good agents that truly know contracts that truly know how to get a deal together have it stay together, and more importantly, give that customer the great feeling that when it closes that they truly work for them without even seeing them sweat.
That is a hero.
That is an angel.
That’s great, that’s great! Peter, do you have any questions.
Now, I was just sitting here thinking that you know one of the, one of the coaching things that you do so well, Mary, is by getting to that “Why?”
Making it really an understanding so that, you know, you’re really, you have your heart and soul involved and invested in these people’s lives.
And as this deal comes together, and everybody’s sort of even after it happened, You look back and you say, “oofff”, that was something else.
And then all of a sudden, the agents are like, “And thank you, Mary!”, and they really want to have your involvement. And probably the action of you even getting involved, heightens that relationship with your agent to the point that it’s a massive retention and recruiting benefit.
Absolutely. I want loyalty. You know, I get that from being raised military.
But more importantly, I believe in confidence.
And if I can give my agent the confidence that on their own, they can save the deal, that’s what it’s about. It’s not easy, it’s not easy for me, as a manager to say, “oh, well that happens, let’s just, you know, that they’ll get it” You know, I don’t want to hover.
You know, I joke, because I’m not a helicopter manager or a helicopter parent but I do like to hover to give my agents the confidence, the ability to doctor that deal to make them even better.
And, you know, with confidence, they’re not just going to do their five million, they’re gonna go do 10 million.
Because you know what, they really believe they can, because I’ve coached them to have that confidence of success. And guess what, failure doesn’t mean that you’re a loser.
Failure is our best mentor. So, when deals fail, we learn from that.
And the best part is, is that my crew is so getting on phone calls, that we go over. You know, like, “Look what I did on this deal. I missed this. Don’t do this! This is what I’ve learned.”
And sometimes, for me, it’s always, you know, I say how I love them, and they do a great job, but from their own peers, to hear how they did that.
That is communication. That is giving them confidence that they feel really good about themselves.
I am afraid they can all teach me. They should be the real ones on this call today.
That’s, that’s kind of a very good point to make a, it’s about people learning from people, right? At the end of the day, we all learn from each other, and if we keep that kind of mindset, it just makes us all successful and builds confidence, as well, as you mentioned,
Let’s talk a little bit about the deal’s, why do deals fall through? Based on your experiences, is the gamut of fallen sales all over the place, or is it really, have you seen anything that you can have that you can correlate to why deals are fallen through, and which ones happened to be, like, the most challenging issues that you can say?
Do you know if there’s the one kind of fallen deal that you can resurrect, and bring back to life, and resuscitate as Peter was saying in our first talk? Can you resuscitate you get those wings back flapping and moving?
I think the best thing, and you know, even I learn from trying to…So “As Is” contracts, are, I do not like.
I don’t like “As Is” contracts. “As Is” contracts, although it appears to protect certain people, it means I’m gonna negotiate the price upfront, and I want you to do the whole laundry list of, of repairs.
The number one thing is that, is the repairs. And to resuscitate that after, I feel like we’re all great negotiators, I’m gonna go in and talk to them.
And if the expectations haven’t been set, there are those that want, I’m going to win with the price, but then I’m gonna, go ahead later and negotiate all these repairs and get my credit.
The one thing that I have found that brings that – those wing’s back on that Angel – is telling the seller here, and this is for seller.
“You know what, Mr Seller, Mrs. Seller, I want you to do an inspection ahead of time. It’s going to be the best $200 to $300 you’re going to spend. Because guess what, we’re gonna know what all the problems are ahead of time. We’re going to correct those that need to be and disclose those. But when somebody comes in, we’re gonna say to those buyers, hey, guess what? We already got the inspection. You know, you wrote an offer, let me give this to you.”
And that, I think, brings peace of mind. And if that buyer wants to get it reinspected, they can do that at a discounted price.
So, number one for me is, is the repairs. It kind of fluctuates with appraisal.
Appraisers now are getting very strict on appraisal value. So, we talked to our seller.
Look, I’m gonna set you up for success. We’re gonna get you the inspection that you paid for. We’re gonna go ahead and do the appraisal because I want to be able to tell all – I want to be in control, right? I want to know everything that could possibly happen to set you up for success and less risk.
Now, there are people, more of them are likely to do the inspections than they are to do the appraisals. But the most important thing, and not a lot of people always think it’s tangible, like appraisal or inspections, is how the other agents interact with other agents.
And I think what needs to happen is, is that they, they communicate, and they listen.
This texting and e-mail, you’ll pick up the darn phone speak to someone. And when you do that, you’re, you’re giving it as, you know, I’m here to listen.
So, David if you were this person, I would say: “David, you know what? I understand that we got, what do you think we can do with this? Here’s what is important to my buyer. What is important to your seller?
That’s when you find out, get around everybody’s ego, Let’s get the deal to work because at the end of the day, I want you to make your money. We can make our money, and more importantly, let’s get the seller and buyer to have a great experience.
There are a lot of off shoot ones. I think with COVID, and I know that that’s anomaly in all of this it’s unprecedented, but I feel like because it’s a seller’s market right now, the market is very strong.
We haven’t slowed down a bit. I think people are afraid to lose properties. So, an offshoot of this is that they’re making multiple offers on multiple properties using the “As Is” contract.
So, I simply tell my agents to ask, “Hey, David, is just by any chance, has your buyer made other offers on properties?”
Like I’m amazed at how many agents say, “Yes.” I’m like, so, “Tell me what they want. Let’s cut to the chase.”
But. I asked the questions. I want them to answer, ask questions, listen, and then just keep it simple and communicate.
But these are the ones in my book.
So, on the home inspection.
I know back when, you know, the downturn in 2008 through 2012 and so forth.
You know, where it was a very much buyer’s market, those home inspections by the seller was always kind of, added some trust and faith value to the market so the buyers would buy. In today’s market, where it is such a seller, are you seeing sellers doing that in order to protect themselves and also to be transparent to the potential buyer?
I do, because that is always been something that I’ve coached the agents to do and again, not all of them do that. But you know what? I…What I get frustrated with, and I know my I can see that my agents get frustrated when every deal you have has a problem with inspection.
So, how do I take that issue and find solution to it.
Even under a Seller’s Market they are over asking, but then they’ll cut you down when they have the inspection.
And so I’m like, how do I eliminate that objection in the best possible, most professional, respectful way?
And so I tell my sellers, get a home inspection because if somebody says, “They’re worried about the roof.” Guess what? I’ve got you covered!
Here’s what I found out. Here it is, You’re welcome to get your own inspection, But if it is a problem, I want to set my seller up for success as well.
So, if it is a problem, and the seller just didn’t know, then if we want to limit the pie on whether it’s going to be cash or financing, financing that’s gonna require insurance on a roof, then I’m gonna coach my seller by doing this.
You’re gonna save money because here’s what happens with the buyer.
There’s a roof issue, OK? It’s gonna cost 20,000, but I want 50,000 off your price!
Trying to control it the best way.
You can, nothings perfect. But look, what can I do to overcome an objection that I see over and over and over again and the expectations that I set. I’m going to tell the buyer, this is not a chance for you to do a laundry list. They’re not going to fix a hole in the wall, a little nail hole in the wall, if it’s cosmetic. It’s only for major things. I’m going to have that expectation set.
So when it comes time, I’m not going to have a problem.
Then, the course of not having to extend the deal, is paramount because when you have to extend it, then the seller or the buyer at any point can say no!
And guess what?
Then its down.
At, you know, it’s really important to keep those wings on there in any way you can, by setting those expectations.
Yeah, it is very hard
One last thing before we end the conversation.
Peter and I, we were talking about, this is a very important part of our, our brokerage and a part of our business in the value proposition that, you know, managers do bring to agents as far as retention, and it’s a recruiting aspect as well.
It actually covers all three pillars of what I consider what a brokerage always has to measure against: retention, recruiting and production. So, it fulfills that.
So Peter and I were talking – naturally being the Tech Geek I am, right – How can can technology solve this problem?
Do you think technology? Is there a place where technology can help in this area?
You know, I do. I think technology is key. I think knowing, having the information that there are failed sales, because as managers were required to do so much, and just trying to find how to get that technology wise, we do have that. Where I could look up on my profit power, and look at what my failed sales are.
I think technology, with statistics, I always told my agent, the best agents, know their numbers.
If there is some technology that says — you know, it’s kind of like My Analytics, right?
“How much collaborative time that you have? What are you focusing on? How many meetings you are?”
If an agent could see, you know, out of these sales, or these deals that you’ve written that have gone pending. And given them statistics to look at, so that, when I am every quarter working on their business plan, because I don’t wait to the end of the year to do that, then I have something to focus with them about.
Sometimes when they see it in writing. You know, things that I see. “What do you mean my collaborative time on My Analytics, I am the most busy person.” But, you know, it sets more of reality of what that could be.
I always believe technology can change the world that has, but I think it’s information for a busy agent or a busy manager to have in front of them, Then it’s, then you focus on it, right?
Because if it’s not, we have to go find it, it takes longer. If we get it automatically, then it points to purpose. Then I can focus on it because I’ll go, “What do you mean? Oh, my God, I got to call that agent, what do mean it is at 50%. I know this agent.
So, I do think technology would be good. It is worthy of a conversation on what would, you know, what would the agents feel would be, and you know what?
You, you’ve prompted me to maybe ask those questions to my own agents, “What does that look like?”
Well, we kind if actually gone down the rabbit hole of how AI and machine learning technology can help. In other words, can we have enough data points with accuracy that can tell us and provide events maybe like a yellow flag that gets risen or a yellow flag. A caution flag that says, during a race, you know, because that’s what it is, it’s a race during this contract, right?
So that caution flag gets waived and says, “Hey, look, this is, hey, this is kind of on the roadway for a collision or an accident nearby. Here is what it is and maybe even provide prescriptive analysis as well, too. But that’s where Peter and I were kind of going down.
I loved that! It is kind of a pit stop.
Change those tires!
Absolutely is. I’m very fascinated with AI and all that.
It can just need somebody to kind of, you know, go through that process and find out what’s important.
I love that because they’re so busy right now? I worry about them just taking that time to kind of balance themselves and kind of re-invigorate themselves. Because they’re, so, it’s challenging out there right now.
Yeah, yeah, and that’s one that’s a misnomer that the public doesn’t really is aware of, right? Is that, how busy real estate agents really are?
They think, you know, selling homes and buying homes is a piece of cake. But we all know inside the industry that it’s a lot, lot of work, it’s not that easy to be successful.
Anybody can be a real estate agent, we’re not question that, and as long as you pass your state test and your working, and you can do it part time, whatever. But, if you’re making a career out of it, if you’re going to be successful, and have any type of success.
It takes a lot of work.
So, thank you very much for joining us today.
So maybe let’s, let’s maybe we’ll think of another topic at some other time, but look, thank you very much for joining us today both Peter and Mary and have a great day, alright.
It is always a pleasure working with you guys, have a great day!