Closing costs
In my life, there are few if any financial moments that have created a lasting positive memory. At least that is how it has been for me. Not too many earth-shattering activities, but one on the money side stands out. So that is what this one is about, one of those moments where a financial miracle happens, and it is at the hand of one of my heroes.
It is 1992 and I had just accepted a transfer to the Rockies from Vancouver Island. We had two kids and the third was as they say – on its way! We had decided/committed to buy a place in Canmore. This was a big deal as a first-time homeowner. It was an expensive market – you know the deal. We managed to scrape together a down payment with some serious family member’s help. It was late in the year, and we managed to find a cool condo/townhome. It was in a small development that was just built, the last unit in the project to go, and the developer was motivated.
Everything was falling into place. We had the accepted offer. The bank approved the mortgage and all we needed to do was close a few weeks later. This is where things got kind of crazy. As a first-time homeowner, I did not know anything really. I certainly did not know about the surprise of “closing costs.” I think it was three-four days before the closing date that our lawyer called and told me it would be $4,500 to close. “What’s that?” I asked. Yes, money for the prepaid condo fees and the property taxes. I was not planning on this and finding an additional $45 would have been hard but $4,500 was way out of range, everything was already maxed.
What to do? We did not have much in the way of options. The bank was an obvious choice, but they said we were beyond the limit with the mortgage, our credit cards and a car loan. We did not have any other family cushion and, short of a miracle or a felony, we had no options to come up with the cash. As the days grew even closer to closing, I had to face the fact that we did not have the funds.
But then a thought occurred to me – one of those ideas that grabs you hard. As part of our moving deal, we were given a lump sum of two weeks’ pay to cover incidentals, like your cable and phone services and license transfers, that kind of miscellaneous stuff. I remember thinking at the time that the company policy was very generous at six weeks’ pay for out-of-pocket expenses for “senior executives” with “real estate” activities or some such wording. But that did not apply to us, I guess.
The day before, I had just been introduced to the GM and RVP and he was seemingly a very nice guy with a genuine interest in me, my family, and our new relationship.
My idea was the company could amend and extend its offer for out-of-pocket expenses to the full six weeks. That meant that I needed approval. The sign off of my direct boss the controller and the GM/RVP – two approvals for everything!
I asked my boss that morning and she all but laughed at my request. I explained how dire the situation was and the fact that I was probably going to lose the deposit, not to mention I would still be living in the hotel! Which in and of itself was way beyond a reasonable amount of time. Not to mention the meals and the laundry costs.
I finished my conversation with her by asking that if I could get the GM’s approval, would she sign off? She did not like this approach and I could feel how irritated she was that I was even asking. But I was desperate. I had my family to look after. If this fell through, it was going to be a serious blow and I was not going to let that happen. She somewhat acknowledged the seriousness of the situation, but clearly stated that it was not her or the hotel’s problem.
In the end she reluctantly agreed to my asking the GM for his approval. Wow, that was tough. She clearly is not too concerned about us, I thought. Then I did a 360 in my head about asking another person that I barely knew for help. Serious help. We are talking about $4,500 in 1992. That is almost $10K in today’s value.
So up I went from the bowels of the hotel to the other end where the executive offices were. I did not have an appointment. He was with someone, and I told his assistant that I needed a signature and would wait. This was not an uncommon practice, so I sat down and soon enough he was free.
I walked into his office and down the short flight of stairs to the level of his office which was quite an impressive office. Adorned with pictures of Marilyn Monroe, Bing Crosby, Queen Elizabeth, all guests of the hotel – just to name a few.
A Financial Miracle
“How can I help you?” he asked with a big voice and a smile to match. I stood and explained briefly that we were a day away from closing and I had been surprised by the closing costs and we were going to lose the deal if I did not come up with an additional $4,500. “Oh – that sounds serious, how can I help?” he asked. “The company’s policy allows for up to six weeks’ pay for out-of-pocket expenses for managers with related costs,” or something nebulous like that, I said.
“What I’m asking is you approve an additional four weeks and Linda already says no but she said she would go along, so long as you approve.” He looked at me and smiled, “Sure, that’s easy and this way you don’t lose your house.” I couldn’t believe my ears. With this out I reached into my jackets breast pocket and pulled out the turquois blue cheque request, already made out to me and for $4,500. He signed it, shook my hand, smiled like only he could and said, “Now, that wasn’t so hard, was it?
I was blown away. Someone who I barely knew felt it was important to help me and my family in a time of immense pressure. I guess he knew what he was doing. I will never forget his help. It also taught me a very important lesson. That is, looking after the people who work with you is part of the job. For the next two years I worked my fingers off, modernizing the accounting system and getting things ship shape. The next ask was his.
He called me one day from another hotel in the region and said, “I need you to come by and have lunch.” It was an hour away and I got into my car and, not knew the circumstances. When I got there, it slowly become clear, and it was six months before I cleaned out my desk back at the headquarters hotel.
Asking for help can be intimidating. In hospitality we all work hard, and the sacrifices of time and effort are exchanged for a place to call home; a place where brands, owners and some GMs invest in their people.
That is what creates immense loyalty and that is hospitality. Thanks, TK.
David Lund, a financial consultant for hotels, shares his thoughts on how hotels should approach hotel finance software and tools, and the role technology plays in daily operations, highlighting the skills needed to succeed. With vast experience in hospitality operations, finance, and accounting, David offers his unique view on the hospitality business and advocates financial literacy for hoteliers as one of the most crucial skills to have.Contact David at (415) 696-9593
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