Jordan Boyes

Broker/Owner, Boyes Group Realty Inc.

Jordan Boyes advocates for a methodical and empathetic approach, prioritizing a deep understanding of the clients’ situation. “First, I would arrange a comprehensive meeting with them to truly understand their specific circumstances, financial stressors, and ultimate goals,” Boyes explains. “Listening carefully to their concerns, assessing their emotional state, and gathering all relevant information about their mortgage, outstanding loans, and both properties is paramount. This initial deep dive builds trust and forms the foundation for a tailored strategy.”

Following this crucial information-gathering phase, Boyes stresses the importance of an accurate market assessment. “Next, I would conduct a thorough evaluation for both properties to determine their precise market value. It’s essential the Simpsons have a realistic, data-driven understanding of their equity position,” he states. Once values are established, Boyes would present a spectrum of available options, including the traditional sale route, while acknowledging the current financial constraints. More critically, he would proactively explore avenues for direct lender negotiation: “I would immediately focus on negotiating with the bank to explore a short sale or loan modification, given their clear financial hardship. A short sale, where the lender accepts less than the full mortgage amount, can be a vital lifeline to avoid foreclosure and alleviate the negative equity burden.”

Boyes also champions innovative selling strategies to attract a broader buyer pool, especially in a challenging market. “I would explore creative selling strategies like rent-to-own agreements, lease options, or seller financing,” he suggests. “These methods can appeal to buyers who may not qualify for traditional bank financing, offering flexibility and potentially securing a quicker sale for the primary residence. For the investment property, a rent-to-own could also be an option if tenant issues are resolved, converting a current liability into a structured path to sale.” For the short sale path, direct engagement with the lender is non-negotiable. “I would help them initiate negotiations with the bank, preparing detailed financial documentation, a compelling hardship letter, and all necessary paperwork to support their case for a short sale or loan modification.”

Simultaneously, Boyes recommends a competitive pricing strategy: “Price the properties competitively based on their accurate market value and the couple’s urgency to sell. For the primary residence, considering a slight underpricing could generate more interest and multiple offers, expediting the sale process.” Crucially, he underscores the importance of legal counsel throughout these complex transactions. “I would strongly recommend legal counsel to ensure that all sales processes comply with local laws and regulations, particularly when exploring unconventional selling methods or dealing with uncooperative tenants and short sales.” Post-sale, Boyes commits to assisting with financial planning: “Once a sale is obtained, I would help the couple develop a financial plan for covering any remaining deficit, moving expenses, and outstanding loans, leveraging my network of legal experts and financial advisors to provide comprehensive guidance and resources.”

Tony Joe

Broker/Owner, Re/Max Island Properties

Tony Joe provides a pragmatic, no-nonsense perspective, emphasizing the reality that real estate professionals cannot fabricate market value. “As we all know, we can’t create values that don’t exist. Promising the Simpsons a sale that can’t be achieved in the present market is not an option and would be a disservice,” he states emphatically. His initial step involves a thorough, unvarnished financial overview. “You’d want to start with a comprehensive overview of their entire financial position. We know they face at least a $50,000 deficit on the primary home, but other critical factors must be considered, including legal fees for both properties, mortgage penalties, and your commission. For them to truly achieve their objective of moving and being free of these burdens, how much will they realistically need to come up with?” This holistic view reveals the true financial chasm they face.

Joe recalls historical periods where deficit sales were common: “Those who have been in the business for over 25 years remember that there were long periods when sellers routinely had to bring money to the table for their sale to close.” He highlights a crucial due diligence step: obtaining “authorization for the bank to release their mortgage balance, enabling us to determine if there was enough equity (or available equity) in order for them to close the sale. This transparency with the lender is non-negotiable in negative equity scenarios.”

The stark reality, according to Joe, hinges on the clients’ capacity and willingness. “If the Simpsons are not able to, or are unwilling to, close at a deficit, then you must stop and not proceed further; you simply cannot assist them,” he advises bluntly. He cautions against unrealistic expectations: “Remember — you’re not a genie. You can’t wave a magic wand and miraculously create a unicorn buyer who will pay them what they need. Even if such a buyer existed, would the house appraise for that amount? Lenders typically won’t finance a property above its appraised value, regardless of the agreed purchase price, making such a scenario highly unlikely.”

Should the Simpsons demonstrate willingness to explore solutions, Joe suggests probing less obvious financial resources. “Is their company paying for the relocation? Are their moving expenses being covered? Could any part of the loss in equity potentially be covered by their new employer? Have they even inquired about these benefits?” These questions prompt clients to explore potential corporate assistance, which could significantly alleviate their financial burden. He also suggests investigating tax implications: “Could claiming their moving expenses against their taxes be helpful?”

Regarding the investment property and its mortgage, Joe offers a strategic angle: “What is their current interest rate and balance? Is their mortgage assumable?” An assumable mortgage, particularly one with a low, sub-2.0% interest rate in today’s 7.0% environment, could be an incredibly powerful selling feature. “While this won’t magically increase the house’s value, it could significantly facilitate the sale by offering substantial savings to a potential buyer over the life of the loan, making the property far more attractive despite the tenant issues or negative equity.”

Finally, Joe presents a pivotal alternative for the primary residence: “The last option for them is to consider keeping the house and renting it out until they are in a cash-positive position.” This approach allows them to weather the current market downturn, generate rental income to offset mortgage costs, and wait for property values to recover, potentially turning a short-term loss into a long-term gain. “Ultimately,” Joe reiterates, “you can’t create a value that doesn’t presently exist. Chasing an impossible price will result in an expired listing and money and time spent that you can’t recover. It’s a business decision, pure and simple. You can’t save everyone, and knowing when to walk away is crucial for a realtor’s longevity and reputation.”

GinaRose Cristello

Broker/Owner, Solid Rock Realty

GinaRose Cristello emphasizes leveraging client-lender relationships and exploring long-term holding strategies as primary solutions. She initially focuses on the possibility of a short sale for the primary residence, contingent on the Simpsons’ rapport with their lender. “Do the Simpsons have a decent relationship with the party/group/person holding their mortgage? If so, they may be able to negotiate a short sale of the property, which would allow them to sell it and still pay commissions,” Cristello explains. A short sale is a complex but often effective process where the lender agrees to accept a payoff amount less than the total outstanding balance, typically to mitigate their losses and avoid the more costly and time-consuming process of foreclosure. She suggests this could be pursued “in conjunction with requesting assistance from their new employer(s) for moving expenses, etc.,” tying into other potential financial relief avenues.

A significant and often overlooked alternative Cristello proposes is retaining both properties and entering the rental market. “Alternatively, they could look at renting out both their primary residence and their investment property, then renting themselves in their new city,” she advises. This strategy capitalizes on the current strength of the rental market. “The rental market remains robust throughout much of the country, and they may find that their homes can generate enough rental income to cover the majority of their expenses,” she notes. Even if there’s a small shortfall, a well-paying new job could bridge the gap. “By holding the properties and renting them out, they can weather the current market downturn and wait to sell when the market has recovered, and all their expenses on the properties can be written off against the rental income. This not only alleviates immediate financial pressure but also positions the Simpsons for potential future equity gain and offers significant tax advantages by converting previous residences into income-generating assets.”

Should holding the properties not be a viable option due to overwhelming stress, management burden, or other unforeseen circumstances, Cristello suggests investigating a financial bridging solution for the primary residence. “If holding the property is not an option, they could investigate taking out a personal loan or leveraging other assets to cover the cost of the shortfall in the sale and the commissions.” While this would add to their debt burden, it provides a means to close the sale. “Ideally, though, keeping the property keeps them in a better financial position down the road by avoiding a distress sale during a market trough,” she reiterates. Her ultimate advice often highlights a counter-intuitive but frequently wisest path: “Sometimes, the best advice we can give clients is not to sell immediately, especially when facing negative equity and a down market.”

James R.G. Cook

Partner, Gardiner Roberts LLP / REM Columnist

James R.G. Cook, with his sharp legal expertise, zeroes in on the complexities of selling a tenanted property, particularly when the tenants are uncooperative – a direct challenge for the Simpsons’ investment property. “The issue with tenants refusing to vacate is subject to applicable landlord/tenant laws, which can vary significantly from province to province across Canada,” he clarifies, immediately highlighting the critical jurisdictional nuances realtors must understand. He provides a specific, practical example relevant to many Canadian regions: “In Ontario, for instance, there is a very specific, regulated process that must be followed to obtain an order from the Landlord and Tenant Board to evict an unwilling tenant. This process is often lengthy and arduous, frequently taking many months to even obtain a hearing date, let alone an eviction order.” This protracted legal timeline presents a significant obstacle to a quick sale, directly conflicting with the Simpsons’ two-month deadline.

Cook suggests a pragmatic, albeit unconventional, solution to circumvent the protracted legal battle that formal eviction entails: “One effective alternative is to try and reach a mutually beneficial agreement with the tenant, colloquially known as ‘cash for keys.’ This strategy involves offering financial compensation to the tenants in exchange for their voluntary agreement to terminate the lease and vacate the property by a specific, agreed-upon date.” While this approach requires an upfront financial cost, “cash for keys” can be significantly faster, less stressful, and ultimately more predictable than navigating formal eviction proceedings, making it a highly viable option for clients under a strict timeline. It transforms an inherently adversarial situation into a negotiation, aiming for a cooperative and legally sound resolution that respects tenant rights while enabling the sale.

Regarding the negative equity aspect of the Simpsons’ primary residence, Cook offers a clear and concise legal perspective: “With regard to the need to sell for a price below the value of the mortgage, this isn’t strictly a legal issue concerning the sale itself. From a legal standpoint, the mortgage will simply have to be paid out in full on closing, regardless of what the current market value of the property is.” He clarifies that the shortfall is primarily a financial responsibility for the sellers, not a legal impediment to the transaction itself. “The sellers will absolutely need to look into finding alternative financing options or liquidating other assets to cover that deficit amount at closing,” he concludes, reinforcing the critical need for the Simpsons to secure funds for the deficit, whether through a new personal loan, employer assistance, or other personal assets, to successfully complete the sale and move forward with their relocation.