So where were we? Right. Our sellers had just accepted one of the fifteen offers they received for their property. The buyer was a builder who had given a significant deposit. And the documents had been sent to the parties’ respective lawyers. (For a full recap of what happened, see It Finally Closed! A Real Life Case Study.)

Agents don’t usually have a lot of involvement between the time that a deal is done and the actual closing. There are a few things we typically do prior to closing, but after the deal is done the file is passed on to the lawyers and they do what’s necessary to complete the transaction.

That’s why I was surprised to receive a call from the buyer one day. It’s not proper for one party to call the other party’s agent. Regardless, I listened to what he had to say: “My agent told me to call you directly because you’re a very smart guy who has a lot of honesty and integrity and maybe you can figure out a solution. I’m having trouble arranging financing because there was a fire and the house is in bad condition. I’ve had two appraisals done and they both came in well below the price I paid. What do you think we should do?” Lesson 8: Speak only to the people you’re supposed to speak to. You might unwittingly say something to the other party’s agent that will hurt your negotiating position. 

My interpretation of  what the buyer really said was this: He had visited my website and seen my slogan “Honesty and Integrity Above All Else”. He somehow knew that flattery will get you almost everywhere with me and that’s why he said I’m a smart guy. He knew about the fire and the condition of the home before he made his offer so his reference to those facts was some sort of smoke screen. The real purpose of his call: The low appraisals made him feel like he had overpaid for the property so he wanted a price reduction or out of the deal altogether. I couldn’t tell if he really wouldn’t be able to close or if he was just playing games, but that didn’t matter. As an agent, it was unethical for me to be speaking to another agent’s client directly so I told him that he should be having this conversation with his own agent or lawyer. Lesson 9: If you’re buying, make sure you don’t pay so much that you won’t be able to get financing. If you’re selling, try to find out all you can about your buyer’s financial situation. A high price might make you very happy when you see it, but that happiness will disappear pretty quickly when the buyer can’t close because he can’t get financing.

Right about now, I was feeling pretty good about our decision not to represent this buyer during the offer process, despite his request that we do so. I could imagine him claiming that it was our fault he couldn’t arrange financing because we pressured him into paying such a high price. I could also imagine the sellers claiming that we convinced them to accept this offer so we’d earn both ends of the commission. My litigation training saw potential lawsuits flying left and right with us at the centre. Thankfully, my litigation training had also etched Lesson 3 – Don’t represent both sides to a transaction firmly into my brain. It’s possible that this transaction might end up in a lawsuit, but we wouldn’t be the ones being sued. Now back to our story.

Immediately after saying goodbye to the buyer, I called his agent, who told me that he never told his buyer to call me directly and that he put his client in touch with a mortgage broker to arrange financing. He was very candid and told me that he also couldn’t tell if his client was playing games or if he really wouldn’t be able to close. There was still a month to go until closing so we’d have to wait and see how this played out. Lesson 10: Don’t lie to or play games with your agent. We deal with people all day long so our BS meters are very sensitive and if you’re not straight with us, we can’t give you the right advice.

No one likes to be the bearer of bad news, but we kept our clients informed of everything that was happening. It made them anxious and unhappy, but we were able to reassure them that no matter what happened, we’d handle the situation and take good care of them. We were hoping that the buyer was bluffing and that closing would take place as scheduled, but that wasn’t to be. And that’s why there will be a Part 3 to this story. Please stay tuned.