That Time We Got Cold Feet at Closing
You’d think we’d be experts at the closing table by now. We’re currently living in house number five.
But as we were sitting at the attorney’s office ready to close on our current home, we got cold feet and almost didn’t go through with the deal.
In early 2013, my husband’s employer, a large tech company headquartered in Canada, was gearing up for a huge product launch.
I remember attending a party and talking to the CEO about how great things were going. He had just returned from the Super Bowl (the company had sponsored an ad during the broadcast). Pretty funny that his first football game was a luxury box at the Super Bowl. Nothing like starting at the top.
Things were going so well at the company, that my husband and I, who had been renting for the past 2 years, decided it was time to buy a house.
We had been renters because we weren’t sure how the transition to a new country would work for us (or our kids). We wanted to be able to head south quickly if things at his job, well, headed south quickly.
After a few weeks of searching, I found the one. I toured an open house and called our realtor for a private showing. The house was listed for $387,000. Our realtor thought the house was overpriced and suggested we make a lower offer. Just before we planned to submit an offer, we were informed there was another offer on the table. Not wanting to get into a bidding war, we advised the selling agent that we were not making an offer.
When the selling agent heard this news, he informed us that the other offer fell through and we were the only bidders. We made an offer of $377,000. Our realtor suggested that there may have never been a competing offer and the selling agent was trying to drive our bid higher. Not sure this is completely legal.
Our realtor submitted the offer and was then told that another offer was coming in. We did not increase our offer amount and found out two days later that the other offer of $382,000 had been accepted. In Ontario, it is standard practice for the buyer to have five business days to clear all contingencies. These contingencies typically consist of financing and home inspection.
I was very upset for the next few days, assuming I would start the house hunt all over. But just 3 days later, my husband woke me up early on a Saturday morning to tell me the other offer had fallen through. The buyers could not get financing for the home. The seller was willing to accept our offer of $377,000.
We took the customary five days to erase the contingencies (financing, home inspection) and settled on a closing date of Tuesday, July 2nd, since Monday, July 1st was a holiday in Canada. The house was officially sold. In Ontario, a home is considered sold once the contingencies are removed. It is very rare (unheard of according to our realtor) for a home sale to fall apart once the contingencies are removed. In 20 years of real estate, our realtor had NEVER had a sale not close once the house was deemed sold.
We arranged to meet the attorney on Friday, June 28 to complete all the paperwork so the documents would be finalized before the long weekend.
It just so happens that Friday, June 28 was the day my husband’s company released earnings for the quarter. We were expecting a good report based on the initial response to the product launch.
The Unexpected News
To our utter shock, the earnings were not good. In fact, they were terrible. Just a couple of months prior, the picture had been rosy. But things had taken a dramatic turn for the worse – in just a short amount of time.
To the outsider, this looked like a one-off quarter. Someone unconnected to the company would see no cause for alarm. But my husband had enough business experience to see the writing on the wall.
That the company was in trouble. Deep trouble.
He knew the executive decisions that had been made within the company to put everything on the table for this launch.
Based on the initial reports from the product launch, we believed things were, in the words of Donald Trump, peachy dory. But in reality, things were not peachy keen or hunky dory.
We knew that things at the company were going to get ugly.
The Attorney’s Office
There we sat at the attorney’s office, rethinking our decision to buy this house. Knowing that if my husband lost his job we would be deported if he couldn’t secure another job within 30 days. No matter if the kids were in the middle of the school year. No matter how much we wanted to stay. No matter if we owned a home.
With tears in my eyes, we carefully explained the situation to the attorney.
He gave us two options. Go through with the house sale and hope that things were not as bad at the company as we thought. Or break the contract.
He explained that if we broke the contract, we would most likely get sued. We could lose as much as $10,000 to get out of the deal. If we went through with the sale and my husband lost his job, we could be out significantly more.
The meeting with the attorney, which was supposed to take less than one hour, took almost three. During the meeting, we signed the necessary paperwork to go through with the sale. But at the end of the meeting, the attorney wrote his private cell number on the back of his card. He told us that we could call him at any time during the holiday weekend to discuss the situation. And that he would not send in the paperwork to close the deal until 9 AM on the Tuesday morning after the holiday weekend.
He said that if he did not hear from us, he would send the paperwork and the house was officially ours.
It was a long weekend (in every sense of the word). I couldn’t eat. I couldn’t sleep. I envisioned ICE agents (I don’t know what they’re called in Canada) coming to take us away just as we unpacked the last of the boxes from move-in day.
We scribbled numbers down on paper. We made a pros and cons list. We went to the movies to try and get our minds off the situation.
A happy ending
We didn’t call the lawyer.
We bought the house. We renovated the house. We moved into the house.
Things did go south very quickly at my husband’s company. The layoffs started shortly after that weekend and continued for many years.
That was over five years ago.
On paper, the decision to break the contract and not go through with the closing looked like the best choice. At least financially.
We figured that if we bought the house and needed to return to the States right away, we would lose a significant amount of money on the resale.
Or if we couldn’t sell the house, we would be forced to rent it out. The exact scenario we faced when we were relocating to Canada. We did not want the hassle of trying to manage a rental from a long distance again.
We also assumed that if my husband’s company went through a downturn, that the local economy would suffer, since the company was the largest employer in the region.
However, not all decisions in life are based solely on finances.
We always felt that the rental house was “temporary” and never truly made it feel like “home.” Because the rental house was so much smaller than the house we moved from, we had a rental storage unit with many of our belongings. I missed the feeling of being surrounded by stuff I loved.
We desperately wanted to put down roots. We wanted to feel like we were part of a community and embrace life in a new country. We believed that home ownership was a part of this picture.
Another concern was that we had made a contractual agreement to purchase the house. We’ve never reneged on a contract. And we didn’t want to start because we were absolutely terrified of what could happen.
Looking back, it seems silly that we were so concerned about what possibly could happen that we almost didn’t go through with the purchase. We let our fears of the unknown almost derail our plans.
I’m so glad we didn’t call the lawyer to stop the closing. This house has been great. We’ll have very fond memories of the boys playing soccer in the back yard and our daughter making great friends in the neighborhood.
The finances worked out much better than we could have imagined. The local economy has continued to thrive despite the layoffs at my husband’s company.
The house we purchased for $377,000 (and put in $50,000 of renovations) would probably sell for $700,000 now. The financial decision we agonized over has turned out to be one of the best financial decisions we’ve ever made.