Bad financial decisions - or learn from my mistakes

[ctrapeni]

I have two poor financial decisions that I have made that I can share so that other people learn from them and don't make the same mistake. Now, these aren't bankruptcy scale mistakes, but they are still wasted money.

First the smaller one that will present itself to all of us several times in our lifetime:

Doing a major repair on a car just before selling it.

I owned a 2001 A4 and it had one broken rear spring. I replaced all 4 springs and struts for $1800. Not a bad decision. 2 months later another repair was needed and I had enough and sold the car for $5000. With hindsight and knowing my frustration level with the number of repairs with this car, I could have simply replaced the rear springs. I essentially wasted about $1000.

The second financial mistake that I made will only be seen by most of us once or twice in our lifetime - buying a house.

We were looking for any house in a specific neighborhood. Our realtor found one and we loved it. She, as the saleswoman she is, told us to buy it now since houses don't appear too often in this neighborhood. She also advised us to offer asking price to avoid a bidding war. We bought it and still love the house and the neighborhood. However, houses do come for sale more often and based on sales just a few months later we could have easily have offered $30k less.


Cliff notes:

Always offer less than asking for a house.
Don't do above and beyond repairs on a car that you don't expect to hold on to for years.

Anybody have any others?

[jnm2.0t]

Always offer less than asking for a house.

Your anecdotal story is by no means the foundation for advice, particularly in something as nuanced as the real estate market.

[SteveMKIIDub]

Your anecdotal story is by no means the foundation for advice, particularly in something as nuanced as the real estate market.

Anecdotal story? I got one!

We spent probably closer to a year essentially stalking the neighborhood we wanted. We walked through it all the time with our dog, got to know people and most of all - we kept a close eye over that time to what houses were going for. So we knew that although our house was a bit cheaper than comparable ones (because it had a few things it needed) we had an very desirable location and a huge (relative to other houses in the area) lot. But we never would have known a good value had we not spent so much time stalking the market.

FWIW x 10.

[SteveMKIIDub]

Your anecdotal story is by no means the foundation for advice, particularly in something as nuanced as the real estate market.

Wait I'm not done. More good financial advice.. don't buy an Audi!

[ctrapeni]

Anecdotal story? I got one!

We spent probably closer to a year essentially stalking the neighborhood we wanted. We walked through it all the time with our dog, got to know people and most of all - we kept a close eye over that time to what houses were going for. So we knew that although our house was a bit cheaper than comparable ones (because it had a few things it needed) we had an very desirable location and a huge (relative to other houses in the area) lot. But we never would have known a good value had we not spent so much time stalking the market.

FWIW x 10.

Yes, knowledge of the neighborhood is probably even more important. We were moving from out of state so we were relying on our realtor for that info. But realtors are salespeople are want the sale first and foremost.

[ctrapeni]

Wait I'm not done. More good financial advice.. don't buy an Audi!

Ha! You should see my spreadsheet. I bought it new and thought that if I owned it for 10 years, the repair costs would average down. Guess not.

[blue70beetle]

But bad realtors are salespeople and want the sale first and foremost.

FTFY.

My wife is a Realtor...yes, she wants the sale. However, she also wants future referrals, and selling someone the right home (and not selling them one at all, in some cases) is more important than making the sale today.

Regarding the earlier comment, if you have a good agent, and they advise you that a full-price offer is your best plan, that's probably the best thing to to, based on their knowledge of market conditions up to that point. The extra commission they make from a full-price offer compared to one a few thousand below asking is insignificant, in the big picture.

If you have a good agent, there's an awful lot you don't know about what they're doing for you, whether you're a buyer or a seller. I know this because I've bought and sold homes prior to knowing the inside story, and now that my wife is a Realtor I see that aspect of the transaction, to some degree. But I can also say without a doubt that there are a LOT of terrible agents out there!

[Issam Abed]

FTFY.

My wife is a Realtor...yes, she wants the sale. However, she also wants future referrals, and selling someone the right home (and not selling them one at all, in some cases) is more important than making the sale today.

Then sorry to say but your wife is a poor realtor.
I know this is a going to sound bad (and don't take this the wrong way) but every realtor I have ever had the pleasure (or displeasure) of dealing with ONLY cares about the sale.
About 2 years ago we used a realtor for an investment property (buying) and said realtor was on our side. Amazing to deal with , blah blah blah....Last summer we were looking at another investment property and this time said realtor was representing the seller. There was going to be a bidding war and the realtor made it clear to us (off the record) that we were not going to get the property as said realtor knew our buying style. To them you are a % (and we have dealt with quite a few of them).

As for referrals....usually the COMPANY gets that not the individual i.e. Remax , RoyalLepage , Coldwell Banker , etc

As for bad financial decisions:

• Casino / Gambling - house always win...always
• NEW Cars - unless you can afford it then cars will always be a money pit. We (forum folk) represent a very small percentage of the community that care about our cars.
• GIC's - with the interest rate banks are giving today you are better off putting that same amount of $$ into the stock of said bank.
• Using a debit card . Dumbest thing ever even if you are one of those people who "does not want a credit card". If you can't exercise self control then being in 2012 is not for you. Get a points credit card or even an AMEX if you can and use it like you normally would your debit card. Obviously it goes without saying to not use it if you do not have the cash to back it up / pay it off.

Good financial decisions:

• Property - does not matter where , when or how . Property will always go up in value ...unless you are looking at buying some in Chernobyl.
• Mining , Energy & Banking Stocks - always has been always will be. In January 2009 (see above GIC point) I had $5000 USD set aside in my savings account. I was collecting less than $10 a month in interest. I decided at the time instead of getting inflation value on my money , I would purchase stocks in the same bank the money was sitting in. I picked up 140 shares and today TD is worth $77 so over the course of 3 years I essentially doubled my money (and then some).

[blue70beetle]

Then sorry to say but your wife is a poor realtor.

I think you're confused about what constitutes good. You seem to be implying that a good agent is not ethical and doesn't have their clients' best interests in mind. There are a lot of very bad agents who are very, very successful. However, poor ethical conduct is not a prerequisite for success in that business, even if sometimes it seems to be.

My wife has been involved in real estate her whole life (grew up living in home flips) but has only been working in the business for a little over three years. In that time, she has gotten to a point where she is very successful, has a reputation for honest, ethical dealings, and her clients absolutely love working with her.

Our local newspaper runs a "Readers' Choice" awards each year, which is a poll-based award, and the community has voted her "best real estate agent" the past two years. She is the first agent to win the award more than once, and the first time she won, her volume was much lower than it is today, so she literally beat out agents (who had previously won) that had 10-15x her annual sales volume. Her sales tripled last year and she is on track to at least double this year. She has six closings on the books for next month, and at least three more for July, and is working on pulling a few more together. For someone who is fairly new in the business, who is a single agent (rather than a team), this is outstanding.

Sales are important to her, but not as important as doing the right thing for her clients. If you think she should reverse the order of importance because this makes her bad at her job, I'd be terrified to enter into any kind of business deal with you!

But you're probably right, though, since you know about these things...she's a terrible agent.

As for referrals....usually the COMPANY gets that not the individual i.e. Remax , RoyalLepage , Coldwell Banker , etc

You're not in the business, are you? She gets a ton of referrals from past clients that were happy. No, the company generally does not get referrals - if they did they would just have to pass them to an agent through whatever internal process they have, because the office has no capability to sell a home. The agents do this, and they do it as independent contractors rather than employees.

If I was happy with my transaction, I'm not going to tell people that "office X" did great for me, got my home sold quickly, helped me find the perfect home at the price I wanted; I'm going to tell them the name of the agent who did all of these things, because that's the entity with whom I have a relationship. I'm not sure what referrals you believe come directly to the office, but in general, calls to the office are the WORST source of solid leads for her. Out of all the business she gets that she hasn't actively pursued / initiated, the referrals from clients comprise nearly 100%.

If you're talking about referrals from other agents (someone is moving to a new town, sells their house, and asks their agent to refer them to an agent in their new town), those go directly to the agent as well.

[Issam Abed]

You're not in the business, are you?

Of being a realtor? No , I am an Engineer by profession.
Of owning real estate? I would not waste my time posting in this forum if I was not (pretty logical right?)?
I am not sure if you noticed but I do not hide behind an alias. Like my response stated , it was not a knock at you (or your wife) and yes your wife can be ethical but to walk away from a sale is very unlikely. I respect you for wanting to defend your wife in every aspect possible but the reality from what you have described she represents an extremely small % of realtors in the industry so kudos to her.

[blue70beetle]

Yes, she's definitely in the minority...it can be a very nasty, dirty business. There's good reason people tend to rank Realtors on a similar level to used car salesmen, in terms of moral standing and reputation.