Today’s entry is intended to help answer a common question I am asked; “How can I maximize the chances that our existing Buyers will complete their contracts?”  Well, there is no easy answer to this; however here are a few quick suggestions to help…

1. Act Now. Don’t wait until just a couple of months before completion. If you are going to positively impact the probability of completion success, the sooner you understand and address the issues, the better. One year to completion is not too early!

2. Dedicate Sufficient Resources. Ensure you have sufficient resources to handle the work load and don’t underestimate the time it could take. I would suggest 50 difficult Buyer contracts would require an experienced individual for 50% of their time for 6 months. Remember, in a difficult market it is easier to retain an existing Contract then find a new sale!

3. Contract Audit. Have someone (other than the sales person) audit every Contract of Purchase and Sale thoroughly. Identify any outstanding issues that may frustrate the Contract upon Completion (for example, a missed signature). Tie up any loose ends using diplomacy and great customer service.

4. Communicate. Communicate with each Buyer and each Realtor…now and often, both in writing and in person. The best way to ensure the Buyer maintains confidence in their buying decision is to keep them informed. This offers positive reinforcement that the Buyer is dealing with a professional organization and keeps them excited about their purchase. A personal phone call is an added touch that will also help to identify any issues or concerns the buyer may have…”Do you have any questions about your new home or your Purchase?\"…Deal with each Buyer individually and address their issues.

5. Increase the Buyer’s financial commitment when possible. By selling the Buyer upgrades, etc. this may increase their financial commitment to the property. Such offerings should be provided at a very low price (close to cost) to ensure that they are motivated to purchase such upgrades. Such a purchase should require the Buyer to pay for (or a portion of) the cost of the item and therefore achieving a greater total financial commitment on their behalf. Those that choose the upgrade are more likely to complete and subsequently you have narrowed the field as to which Buyers you may have a concern about.

6. Always show strength and confidence. In all communication always speak with a confident demeanor. This may seem like an obvious, but ensure your messages are direct, confident and positive. By being clear rather than confusing or annoying you will continue to support their buying decision.

7. Remind Buyers about Financing. Engage sales team to start working on individual Buyer financing 90 days prior to completion. In a declining market, appraisal values can often be a problem for banks to provide mortgages at the Purchase Price values. Therefore, more than one financial institution may need to be sourced to achieve the Buyers required financing. The sooner the Buyer deals with this obstacle the better. Don’t leave it up to the Buyer – the sales team should actively assist with such obstacles.

8. Completion policy – Legal Obligation to Complete. Make a very clear leadership decision and communicate to all levels within the company (development managers, customer service team, legal, sales team) precisely your stance on Completions. Which I suggest should be…”In no circumstances whatsoever will the Vendor allow a Buyer to walk away from their commitment to complete on a Contract of Purchase and Sale (other than perhaps a compassionate life situation) Simply walking away from a deposit is not an option for a Buyer and Buyer’s should expect that the Vendor will resort to all legal steps to recover any damages associated with the contractual default.

The Vendor will retain deposit and sue for specific performance and will move to mitigate damages (i.e. attempt to resell the property) and sue for any additional damages such as holding and interest costs, legal, marketing and commissions, loss of sale proceeds, etc.”

Essentially, Buyer’s need to be aware that a deposit is NOT an option to Purchase but a deposit towards a legal commitment to fulfill the Completion of the contract.

Furthermore, the Vendor should send a legal letter immediately upon the Purchaser’s default which will stipulate this position.

9. Selling Standing Inventory. Don’t shoot yourself in the foot while selling the balance of the inventory. It is a potential predicament when a project is pre-sold and remaining inventory is still available. If early Buyers feel new sales are being achieved at significant discounts, this can only negatively impact the likelihood existing contracts will complete. Such discounting if entertained should be done very cautiously.

NOTE - this was intended for the British Columbia marketplace. Some content may not be applicable to other jurisdictions. Always seek independent legal advice on such matters.

Happy Selling,

Cameron McNeill