My first experience selling one of the rental properties was literally a dream. After several years of rotating tenants and even an eviction or two, I had a couple move into the place and within two weeks of living there, they called to say they wanted to buy it. For a fair and reasonable price. After so much drama with it, I jumped at the chance to get rid of it. Still, at tax time, I vowed I would not sell another property I owned. My other two investment properties had their moments, but overall, they had steady renters and I looked at them as being a good retirement plan down the line.
Then in October of last year, while on a business trip in Chicago, I got word the HOA for my condo in Wisconsin was changing the association rules. They were now going to limit the number of units that could be rented versus owner occupied. After spending a sleepless night seething about having a group of idiots tell me what I could or could not do with my property, I realized I would have to sell at the end of my current tenant’s lease.
This was not a happy decision. It was the only investment property I owned that I had any kind of emotional attachment to. I had bought it for my mother to live in and she had spent the last five years of her life there. On visits, I loved the gas fireplace and the patio that overlooked trees and a railroad track, where we actually enjoyed watching a train come through every day.
The only upside, was there was equity and I had a plan for the equity. I was finally going to put an addition on my house. Adding square footage was something I had been wanting to do since I bought my home in 1993. Over the years, different plans had come to mind, but the money was never there. It now was looking like I might be able to make it happen.
In January, I had to return to Chicago for another business trip, so I stopped off in Wisconsin for the weekend to meet with a realtor. The realtor assured me that the market was very hot and that a first floor, two bedroom, two bath condo would be snapped up in a matter of days. Good news to say the least. I made plans to put it on the market in June, with the idea of having it close in August at the end of my tenant’s lease.
Flash forward to June. Despite Covid, the Wisconsin real estate market remained hot. I put the condo up for sale the last Saturday in June. By Monday, I had three offers. I accepted an all cash offer for five thousand dollars over my asking price and basically thought it was a done deal.
I lined up a contractor for my addition, signed a contract for the construction and paid a deposit. I had secured half of the money for my home renovation through a home equity line of credit, which turned out to have its own drama (more on that in another post). The other half of the budget was coming on closing day, September 2nd, a few days after my tenant was scheduled to move out.
I received the closing documents via email and was getting ready to get them notarized and sent back when I got a text from my realtor to call him ASAP.
I figured it was a paperwork issue. It wasn’t.
“The sellers have changed their minds. They are not going to close,” he informed me.
My stomach dropped. “Why?”
“They just said they changed their minds.”
“One week before the close? Don’t they realize they have a purchase contract?”
“They realize that,” he said. “I am livid too. I have never seen this happen before, not a week before the close. Of course, they realize they are going to lose their deposit.”
The deposit they put down was minor and I quickly began to calculate what their boomerang mentality was going to cost me. The tenant was already one foot out the door. We had already lost the entire summer season off the market. I had already committed a substantial amount of money to my renovation project. To say their little “change of mind” was going to put a major kink in my plans was a huge understatement.
“Can we sue?” I asked. I have never sued anyone in my life, but I was ready for the first time.
“That’s a possible option. But they also want to know what the amount of money would be for you to let them just walk away.”
I threw out a number I knew they wouldn’t agree to with the hope it might scare them into reality.
“I will let them know and call you back.”
My realtor called back about an hour later. “They are going to close after all. “
I went the next day and got the closing paperwork put together, sending it off, but not really expecting they were going to show up.
Monday rolled around and my realtor called again. “They are not going to close. They won’t agree to what you asked for, but they are ready to make an offer of damages.”
He also explained that he had talked to a lawyer and that suing could tie up selling it to someone else for months. Not an option, since with no tenant, I was now looking at spending over a 1,000 a month out of pocket for the mortgage, utilities and HOA fees.
Their offer was about half of the number that I had originally thrown out. I rounded it up a bit and told my realtor to present that to them. They agreed. It was still going to leave me substantially short for my renovation and of course, I would now have those lovely carrying costs for an empty condo.
We put it back on the market immediately, but the Labor Day weekend had already passed and although the market was still warm, it was no longer red hot.
Winter in Wisconsin is not prime real estate season. The holidays are also not prime real estate season. The election was also looming, not to mention construction that was set to begin on my home soon.
Showings were done, but suddenly the same condo that was snapped up in twenty four hours was being nitpicked by potential buyers for being “too small” and “not the right location.” The quaint railroad track also became a huge negative.
Since I couldn’t fix any of those things, I dropped the price. More than once and in a fairly short period of time.
Then the last weekend in September, I got the call I had been waiting for. Sort of. It was an all-cash offer, but the amount? 80 percent less than the first offer.
A long Saturday of negotiations yielded another 10,000 and the very bottom price I could accept. Because it was all cash, it closed ten days later.
Once again, I am vowing to never sell another property. To be truthful, I am not running out to buy another property right now either. I would say it is similar to asking a woman who has just gone through childbirth, “So when do you want to have another child?”
That being said, it was another life lesson. Not just about real estate. Here’s three things I learned about myself from my Boomerang Real Estate Experience:
I AM NOT A PASSIVE PERSON:
Alright, maybe I already knew I am not a passive person, but this brought it home. I did not get the impression my realtor had the sense of urgency I did to get this deal done. But then, why should he? He wasn’t loosing over a grand a month. Plus working in a hot market meant he usually didn’t have to do much.
I didn’t feel the listing description or the listing pictures showed off the best features of the condo. So I rewrote the listing and added additional pictures myself. I also didn’t let more than a day go by without texting or emailing him to ask for updates and discuss how many showings were happening and what the feedback was.
I realized that being passive made me obsess on a negative outcome. Doing something, doing anything, made me feel more in control and gave me a more positive outlook.
I AM NOT AS CREATIVE AS I THINK I AM
It was a hot real estate market when we started. I heard stories of buyers trying to buy six different properties and being outbid on all of them. Adding a term or two to the sale would have been easy. Asking for a shorter close, rather than waiting for over two months would have been a smarter move on my part. Yes, they would not have been able to move into the condo until my tenant moved out, but in hindsight, we should have made them close within a month and then rented it back to them. No, not the traditional way to do the deal, but giving them too much time to look at other properties cost me. The “this never happens,” comment my realtor made wasn’t totally accurate. My lawyer had a different perspective on it. He said, “This happens all the time.” The only sure thing is actually having the money in your account.
My realtor didn’t think of doing things out of the box, but I wish I would have.
I LOVE MONEY, BUT I LOVE MY SANITY MORE
My realtor was not happy I dropped the price as quickly as I did. Truth be told, I wasn’t happy I dropped the price as quickly as I did either, but having secured some additional money from the first buyer, made it a little easier. Could I have waited it out and maybe gotten a little bit more? Maybe. Could I have also gambled and ended up going through even more money? Of course. I am not ashamed to say I love money, but I learned there is something I love even more. My sanity. More than anything, I wanted the deal done and the stress of what might happen over. Yes, I am a little short on my renovation, but the weight that was lifted the day the deal closed, was worth the cash I lost.
That turned out to be the most valuable lesson of all.