Your advisor can be your unfair advantage

This Circus needs a Ringmaster

By on in with comments

As I write this blog, I am sitting in my parent’s living room surrounded by boxes and vacuum cleaners waiting for their cell phone to ring. We would all prefer to be doing other things – almost ANY other thing – that would bring us closer to them being moved into their new home.


We are living out the fruits of someone attempting to tackle the complexity of a house sale without the guidance and advice of a realtor.

The drama began when a knock at the door led my parents to be presented with an unsolicited offer to buy their home. After absorbing the initial shock of someone being bold enough to ask if they would sell their home, my parents – well into their golden years – thought that they might be well advised to accept the prospective buyer’s invitation. After all, their fairly large home is in a rural Ontario town (an intersection, really) overlooking a peaceful lake and while most people would find the property very appealing, the prospects of finding a ready buyer just at the time they were wanting to sell would be a bit of a stretch. So, the price was right, the timing was acceptable and, hey, think of the money that would be saved because no one needs to pay a realtor!

The purchasers – two single parents bringing their families together under one roof – engaged my parents in negotiations that would see them purchase the lakefront home. My folks started to get more excited about the move when they found another property to their liking on the outskirts of a nearby city. An agreement in principle was reached around purchase price and possession dates.

The negotiations were very amicable as the 3 households made preparations for relocation, and each party, in the spirit of cooperation and goodwill, allowed the next owners to start moving furniture into their future homes before closing. After all, everyone thought it was a stroke of genius to have all three closings on the same day, so having the move well underway on the closing date will only help, right?

This is where the saga gets more interesting.

Ooops… small snag. The proposed purchasers of my parents’ property contacted my parents on the very day when all conditions were to be lifted: they were having difficulty finding the required financing after being initially promised that there would be no problem. It strikes me more than coincidence that this news breaks immediately following a lender requesting an appraisal of the property. And the purchaser has to scramble to find additional funds to cover the larger downpayment that is now required- I suspect that the bank didn’t agree with their valuation and offer. They’ve called my folks to explain the problem and ask for a price reduction, effectively transferring their problem to my parents.

What seemed like a dream situation slowly developed into a prolonged nightmare of uncertainty and stress… and entirely avoidable.

The waters calm a bit after my parents hold their ground on the deal and the purchaser is able to somehow jump the appraisal hurdle, and today is now closing day… plus one. Instead, however, of enjoying the satisfaction of settling into a new home, we are sitting restlessly in the old house awaiting a phone call from our lawyer confirming receipt of the purchase proceeds. The initial purchaser’s lender has supposedly transferred the approved funds to their lawyer with instructions not to release the proceeds until final approval.

And the would-be purchasers just pulled out of the yard (a little ticked-off, I might add) after being told by my mother that they can’t leave anything more at the house until the deal closes with final payment. At the time I’m writing this, we don’t yet know how the final act of this circus is going to play out. But I’m absolutely certain that NONE of this would have happened with the help of a qualified, knowledgeable realtor.

In the Information Age in which we live, we too often con ourselves into believing that we can know everything about everything and that our self-sufficiency can translate into significant financial savings. But I’ve seen this attitude come back to bite clients in their financial decision-making, and now in their purchase and sale of their homes.

A realtor would have:

• Represented the eager purchasers to the prospective sellers by taking care of the approach and negotiation (the emotional attachment between buyer and seller is avoided, thus preventing the awkward relationship that comes when things unravel);

• Counseled the purchasers on the appropriate market value of the property – a valuation that would likely have caused less concern with the bank (the last-minute financing problem vanishes);

• Guided both parties through the process from proposal to closing (preventing last-minute delays on the closing date);

• Established boundaries of contact (avoiding the awkward “home invasion” of furniture and boxes in anticipation of a smooth transition of the property ownership).

The lesson I’ve had reinforced through this experience is to not be afraid to ask for help. Specialists, whether realtors, financial advisors, lawyers, accountants – the list goes on – exist for the very purpose of helping people whose own areas of expertise lie elsewhere. We live in a risk-adverse society that has responded by building complex systems and processes that present checks and balances at every turn. I’m convinced that what professional advisors offer is the expertise to help me and you navigate these system mazes to our anticipated and happy destination.

To enter the maze alone is to do so at one’s own peril. Got your own story? We’d be happy to share it!

  • Jacob Caldwell
    Aug 1 2012

    Rick thanks for sharing this story. A major hurdle for so many people looking for help with the sale of a family home, their personal finances or any number of other significant financial events can often be traced back to an inability to find a trusted advisor. Here’s a link to a list of questions (put together by MoneySense magazine) that may help in the search for such an advisor: Great post!