“Make your commitment to someone else equal to that made to you”. That has become a mantra that I repeat to sellers, to get no deeper into a purchase than your buyer is into your sale. When he ups the ante and is more deeply committed, then you can do the same. Here’s how I came to do this:
After many showings, I found a buyer for Noel and Pam’s farm. They had great land, but the buildings were so-so and it’s the buildings that people excited, not the land. But I managed to convince a young couple, Mario and Beth, that this was a good place for them. It was, too. Noel and Pam had a farm with a future - because of the land base.
So, Mario and Beth duly applied for the loan they would need. Time passed, as it will. Then we got the word - they were denied. I had not expected that. Neither did Noel and Pam. Unbeknownst to me, they had gone and bought a new place in which to live after the sale. Now, with the sale vaporized, they were stuck. They had failed to have a contingency in their own purchase, a way out if they could not sell their farm. And the folks selling to them were not going to be nice and let them off the hook, either. These people insisted that Noel and Pam had to buy the home they now could not afford. To get out of that contract cost them tens of thousands.
And they were royally pissed about it, pissed at me. Legally, they had no recourse; I had broken no law, breached no ethics. To be fair to Mario and Beth, I had put in a contingency for them to receive their money back if they could not get financing. They had made a sincere good faith attempt to do so and failed to get the money needed to make the purchase. There was no question of them not getting their deposit money back. By inserting this standard contingency clause, I had merely fulfilled my fiduciary duty to them as buyers. the other standard contingency is for the sale of ones’s home and Noel and Pam had failed to put this one in their own contract to buy. Noel and Pam had to accept this omission, but that did not lessen their anger toward me.
I tried to explain to them that had they only told me what they were doing, I would have counseled them to put in the another standard contingency, one on the sale of their property, to protect themselves in case the sale of their farm fell through. But they were in no mood to listen to anything I had to say. They had been convinced (by me? by the buyers? by their own optimism?) that their farm was sold, period. They were just waiting for the closing to get the money to buy their new home.
Then I made a tactical mistake. I brought someone else around to see the farm, naively assuming that they still wanted to sell it. Wrong. Wrong, big time. Noel and Pam no longer wanted to sell and most especially they did not want me involved if they ever changed their mind. Another man done gone.
The ending to the story is twofold. Mario and Beth stuck by me and ended up buying a more expensive farm (one with good buildings and poor land - ironically, the very one that they had first looked at and wanted but had given up on as too expensive). Sometime after the sale of Noel and Pam’s place went down the tubes, I learned of a Federal program to lend money to minority owners. So, here’s what we did: the more expensive farm went in the wife’s name alone, a fact which caused much merriment between them, Mario being now a hired man instead of an owner. His wife, as sole owner, was the boss. Although women outnumber men in the world, as farm owners, they are considered a minority. If we had extended the contract on Noel and Pam’s place a couple more months, they could have secured the financing after all and probably Noel and Pam might not have lost that money and we could have parted the friends that we had started out to be. To other side of the story is that a decade passed before Noel and Pam got the urge to retire again. It was quietly listed with another firm, not us, and they found a buyer. It never made their web page and they never put up signs. Noel and Pam were taking no chance that I would show up there again.
I hate to lose friends even more than I hate to lose sales. So now, I have this litany I repeat to sellers: “Make your commitment to someone else equal to that made to you”. Repeat after me, “Make your commitment to someone else equal to that made to you”.