Clients who can’t sell as quickly as planned may face ripple effects, including carrying costs and delayed retirement, as well as the need to tap into other investments prematurely.sesame/AFP/Getty Images
Ryan McLellan, a financial advisor with Edward Jones in Nepean, Ont., recently had a client come to him with a tight timeline.
The client had purchased a new home in southern Ontario and needed to sell his property in Ottawa within three months. But in the current housing market downturn, he wasn’t optimistic.
“There was no enthusiasm,” Mr. McLellan recalls. “He had already moved past hope and was bracing for what it might cost him if the sale fell through.”
Advisors across Canada are encountering similar cases. Clients whose financial plans hinge on a real estate sale may now be facing unexpected delays.
Driven by reasons such as retirement, long-term care needs, or transitions following the loss of a spouse or a new job, these planned asset sales are now facing a cooling seller’s market.
In turn, financial advisors are stepping in to help clients bridge the gap, offering strategies to manage liquidity and preserve longer-term goals.
Rather than relying on a forced sale, Mr. McLellan works with his clients to rethink their strategy, which may include tapping into a home equity line of credit (HELOC) – a concept some still view with skepticism.
“Especially for retirees, they’re like, ‘Oh, I thought this [concept] was dirty.’ And I explain, ‘This is your largest asset and it’s the majority of Canadians’ largest asset, so we need to look at how to maneuvre,’” he says.
For years, Canadians treated real estate as a reliable way to accrue long-term wealth, but now many are rethinking that assumption. Mr. McLellan encourages clients to build in cash-flow buffers and tax-aware withdrawal strategies that don’t rely on a single asset.
“When someone loses a job or a spouse, or needs to move into care, they are often overwhelmed,” he says. “It’s the advisor’s job to provide clarity and options, not just a one-size-fits-all plan.”
Trying to avoid a forced sale
Brianne Gardner, senior wealth advisor and co-founder of Velocity Investment Partners at Raymond James Ltd., who works in both Vancouver and Toronto, says the current landscape is a tale of two markets.
Trophy properties in desirable areas are still selling, she says, but other segments, such as downtown condos or higher-end homes in slower-growing areas, are sitting on the market longer.
Clients who can’t sell as quickly as planned may face ripple effects, including carrying costs and delayed retirement, as well as the need to tap into other investments prematurely.
Ms. Gardner says the key is to avoid turning someone into a “forced seller.” Instead, the focus is on strategic planning. That might involve accessing home equity through a HELOC, drawing from liquid investments such as tax-free savings accounts (TFSAs) or non-registered accounts, or resorting to bridge financing, which often carries higher interest rates than more traditional loans, when necessary. Some clients are even reconsidering their retirement or estate plans.
“The conversations we have include stress-testing retirement projections against lower valuations or delayed sales, and ensuring estate plans don’t hinge on a single illiquid asset,” Ms. Gardner says.
“In practice, it’s about adding options and multiple buckets to spend from, making sure there are ample liquid investments, alternative income streams, and tax-efficient structures, so their retirement and legacy goals aren’t dependent on the mood of the housing market,” she adds.
For Ms. Gardner, avoiding surprises means devising contingency plans for various possibilities.
“My advice is simple: don’t leave the sale to chance or crisis,” Ms. Gardner says. “Planning a few years ahead allows families to choose their timing, prepare the property properly, and avoid selling into a soft market under duress.”
Managing stressful conversations
Grace Zhang, an advisor with Yijun Grace Zhang Financial Services Ltd. at Sun Life Financial Investment Services (Canada) Inc. in Richmond, B.C., has seen several clients navigating their way through this real estate limbo.
In some cases, they’re juggling multiple investment properties with mortgages they can no longer sustain. In others, they are experiencing a personal transition, such as job loss, retirement or the need for long-term care. One client had to sell after losing his job and was unable to manage the mortgage payments.
“These are stressful conversations,” Ms. Zhang says. “Clients are often emotionally overwhelmed and worried about making the wrong decision. They need to know they have options and someone to guide them through it.”
She says her role is a combination of providing financial planning and emotional support. She works with clients to develop flexible strategies that can adapt to life’s changing events.
That may involve establishing what she calls “Plan A, B and C” – such as selling a property, refinancing, drawing from registered investments or renting out a suite to generate cash flow. Ms. Zhang also encourages clients to begin these conversations early, well before a sale becomes necessary.
She notes that real estate isn’t always the stable retirement plan people believe it to be. Properties are illiquid and expensive to transact. Public equities, on the other hand, with their greater liquidity and easier access, can provide faster access to funds in a crunch.
“We just need to find the best option for the client and their situation,” Ms. Zhang says.
As more clients grapple with the emotional and financial strain of delayed property sales, advisors say that conversations are becoming more proactive. Stress-testing retirement plans, rebalancing portfolios and integrating estate planning with liquidity needs are now standard practice.
“You never want to be in a position where an unsold home derails your retirement,” Mr. McLellan says. “A good financial plan prepares for what you can control and helps you stay calm through the rest.”