This tale might be fictional, but it’s based on several real, local people and events.
On things that actually, really happen around here.
Bill had been turned away from every brokerage in town. No one was willing to sell his house for him.
No agent, whether moral or shady, would touch it.
And it wasn’t because of the property; the home and yard were in great shape.
The problem wasn’t the location. Actually, it was a highly desirable place.
Buyers were searching for a property like his.
Still, no one would list it.
Why? Because Bill insisted on selling it for double its value.
What was worth $300,000 in the local market, he decided he would get $600,000. And he was completely dead serious.
So he left office after office, unable to find the agent who would invest their marketing dollars in such. No one was willing to torpedo their own reputation by listing such an impossibility.
Bill returned to his home and promptly stuck a sign in the yard. If no one would help him, he would do it himself.
Two things can happen at this point, and neither is a good thing.
- Bill could sell the house to an unsuspecting private buyer who doesn’t realize it’s a horrible deal. Because ‘hey, it’s a private sale, so it must be cheaper’. Umm, no.Either the buyers come up with cash for the inflated price and buy something without any promise of equity for years and years and years or, more likely, the bank looks at the deal, and refuses to fund the mortgage. Because paying double is insane.
- Or, most likely, and what happens most of the time, the property sits. And sits. And sits.
Because people aren’t stupid. No one will pay double. Or even 30% more than it’s worth.
Look, if this forewarns you about anything, let it be this.
- Beware: private sales aren’t always on the up and up.
- Buying without an agent to protect you is risky
- And, if you’re selling, for Pete’s sake, remember people aren’t idiots – not buyers, not agents – and be reasonable. People (and banks) will only pay what things are actually, legitimately worth. Anything more is flat out greed.
Have you ever purchased an over-priced home? Why?
Swimming in debt?
You’re not alone.
Over 70% of Canadians have debt, and the average family has $100,000 of it. 
Planning to get out of hawk by selling your house?
Between increased debt and the rising cost of living (have you seen the price of cauliflower!?!), it can be tempting to sell and make a fresh start.
But there are a few critical flaws in that plan.
NEEDING A MIRACLE
If you’re at the end of your financial rope and need a miracle in six months or less, selling may not work for you.
One client learned this one the hard way. High on debt and low on cash, she needed to sell and fast.
Unfortunately for her, the market had slowed and she was not in a desirable location. Translation: she could realistically expect 6-12 months for a sale to happen.
It didn’t sell in two months, so she decided to try selling privately. It was the worst time to pull all the marketing because the bank was hovering, using words like ‘foreclosure’. She was desperate.
It was only a few months later the property was listed again, this time on behalf of the bank. She’d lost the house, and any profit it would have yielded her.
WHEN THE SALE WON’T COVER THE DEBT
It baffles me how often people expect the price of their home to be determined by either their sentimental attachment or the size of their consumer debt load.
But it happens all the time.
“But Tina, can’t you get MORE for my house than market value? I really need the money.”
Sorry, no. The market is what it is.
One’s inability to live within their means does not increase property value.
This principle also applies when one wants to sell a vehicle, firewood, or second-hand pumps on kijiji. Things are worth what they’re worth, regardless of how wealthy or desperate you happen to be.
MONEY IS NOT THE PROBLEM
Money doesn’t solve money problems.
Just ask the many lottery winners who are worse off after coming into a pile of cash.
Debt is not the problem, it is the symptom.
Maybe someone else caused your debt. Maybe it had nothing to do with you.
But chances are what got you into financial doo-doo was not a lack of money. It was a lack of self-control and a failure to live within your means. It is, in a word, entitlement.
“It doesn’t matter what you think you deserve, it doesn’t matter what you think you need, it doesn’t matter what you think you have to have to fit in. If you don’t have the money, then you don’t need to be incurring the responsibilities, the debt and the obligation” (Dr. Phil.com)
Getting an infusion of cash from selling your home may get you out of hawk for a while. But unless the habit of overspending is changed it will continue to pull you into debt.
The market is what it is.
Real estate agents, while completely awesome, cannot actually work magic and force your house to sell in a week.
Selling your house may be part of your financial restoration, but don’t let it be the only part. The plan should also include ditching the habits that got you into that situation in the first place.
You probably have a pile of debt.
And it’s probably getting bigger, not smaller, right?
You’re not alone.
Most of us do, and it’s the kind that gets bigger every year.
According to Statistics Canada, 71% of all Canadians carry some form of debt (2012).
“Yes, that includes mortgages, but it also includes a growing pile borrowed to buy cars, new kitchens and many of the fashionable material trappings of the modern middle-class lifestyle”(1)
How do people deal with it?
They ignore it, letting debt climb every year, and hoping it gets better one day. We won’t go into why that’s a bad idea.
They refinance, using equity to pay off debts. Basically, it’s like using your house as a debit card, withdrawing cash whenever you need it. The plan is shaky, and depends on the market value to increase forever and without stopping. (Don’t think prices will drop? Our neighbors to the south thought that too…)
Or they sell, thinking the profits should be enough to dig them out.
That’s when they jolt awake to the fact that the sale won’t necessarily cover that pile of debt.
And it makes them crazy. The thought of getting a payday can make people do some wacky math. (Just ask anyone who’s dealt with the division of an estate)
They’re shocked. Disappointed. Outraged and defiant even.
But here’s the thing.
The value of a property is not based on how much debt a person has.
Aren’t you glad? Imagine paying double for a house just because the guy who owns it happens to have loads and loads of debt. Would you pay it?
And they won’t pay you either, sorry.
So what can you do when the sale doesn’t cover your debt?
Brace yourself, you’re about to hear things you already know.
- Adjust your expectations. Remember – house value is not at all impacted by your finances. Besides, no one owes you financial freedom any more than you owe it to them.
- Decide to stop adding to the debt pile now! It won’t grow if you don’t feed it.
- Make a plan to pay off existing debt. Selling the house, when the value doesn’t cover it, is not the plan. Make a new one. Second jobs, selling other assets, reducing spending and throwing down higher payments… do what you must to climb out.
It’s that simple, and that difficult.
Overspending is killing us, and entitlement about house prices is not helping.
Welcome to the reason we’re all in debt up to our eyes.
I’m in the trenches with you, and the other 71% of Canadians.
What’s say we climb out instead of expecting others to pay our way?