Sales Back Out is one of the most disappointing events in the work of a broker and a salesperson. It is when a sale is reserved and for certain period of time the downpayment equivalent is expected to be paid, but was not. The disappointment comes from the fact that once the downpayment is paid, the commission for the broker and salesperson is already due. For beginners who have made the first sale or ice breaker sale, a sale that backs out is not only disappointing, but devastating at times. This experience will either give a go or not go for a real estate sales practitioner who has just started his career in real estate. Otherwise, the result is a recruitment fall out for the manager, broker or to the company.
This is devastating for some because the expenses made in pursuit of closing the deal is from borrowed funds. Oftentimes as the reservation is made, a commission is already expected. Thus, a promise of payment for borrowed funds is also made. For other companies (sellers), because the reserved sale is already counted as a sales performance, corresponding incentives are already given. Unfortunately, once the buyer backs out, the incentives that have been given will be considered as part of advances, thus making the salesperson or broker disappointed.
Avoiding Back Out is highly dependent on how the salesperson has rendered his or her sales presentation briefing. While client qualification is vital to closing the deal, the briefing stage is crucial to keeping and converting the option sales (reserved sale) to paid-up sale (commissionable sale).
Most real estate transactions that back out are reserved sales that resulted from a sales presentation which lacked the explanation of important provisions of the payment terms that were not made to be understood to the buyer. If there are other reasons for a sales back out other than what was stated above, this may be a case of purposive omission. Though omission is seldom a reason, there are some cases wherein it happens out of desperation to meet the sales target. For this rationale, a reserved sale is not expected to be paid-up from the beginning. This reserved sale is what we called inauthentic sale. Oftentimes, this issue is the effect of non-disclosure and remains as a doubt on the performance of a sales practitioner.
To learn about how you can save your real estate sales transaction that turned out bad, we invite you to attend our 16 Units CPD seminar for Brokers and Salespersons on October 22 & 23, 2016. You can please call 0943-6853016.