Introduction by Josh Svec
One thing I have learned in real estate is you can read all the books and listen to all the podcasts, but it does not equal growth unless you are out there on the front lines putting it to practise. To me, the best advice I receive in real estate is taken from real life examples.
This month’s tale of Case Study From the Trenches is about a deal that were supposedly done, going haywire on closing day.
When Buyers Walk
By Henry J. Svec Private Investor
It was 10 minutes to 5 on a Friday and my lawyer still had not received the funds for a purchase of a property we had sold to a large investment firm.
The deal was to close at 5:00 p.m.
I was initially reassured that we had that large buyers deposit of over $10,000 but was quickly told that we would have to litigate to get any of that once we proved damages. In essence my lawyer told me the buyer could walk and there was virtually nothing that I could do.
Then the call came at 5 minutes to 5 that they wanted an extension for 10 months to close. I said no way. At 2 minutes to 5, they wired the funds and the deal closed.
Some years earlier I was about to purchase a residential-investment property and had waived all conditions. On the final day of closing my agent after the final walkthrough stated that the seller had not cleaned the one unit nor fixed a broken tile that they had promised to fix. I took this as a sign of dishonesty (they actually could have just forgotten or because of the size of the deal not thought it would matter to me but it did). The agent said she would clean the unit herself and have someone fix the tile after the closing. I refused. “Tell them they can take $5,000 off of the price or I’m walking” I told her. “You are being unreasonable” she said. I stuck to my guns and at the last minute they reduced the purchase price by $5,000. The sellers were highly trained professionals who were arrogant and disrespectful. It cost them $5,000.
You never have a sale until the deal closes and your lawyer tells you the money is in the bank. Anything can happen. Deposits are meaningless. If a buyer wants to walk before closing they can always find a reason to do so. So next time you get an agreement to sell your property and conditions are waived, just celebrate a little bit. Wait for the party until your lawyer gives you that closing call.