The funniest part about taking your time and energy managing your personal finance is that you become more inclined to make money mistakes. The idea behind all this is fairly simple; the more you know about finance, the more you want to make things by yourself. Sometimes it works, sometimes it doesn’t. Today’s post is in related to Canadian Capitalist 3rd year anniversary contest where he was asking bloggers about their money mistakes. I thought it could be interesting to write about how I dilapidated ten thousand dollars a few years ago. Yes, I lost ten thousand loonies in a single decision at the age of 24 when I decided to sell my house with a real estate agent.
|Selling in a hurry
It all started when my wife and I fell in love with a house in our neighbourhood. We visited the property and made an offer the very same day (and we got late for our Easter supper with my parents!). The next morning, we put our own property for sale in the hope of a fast sale. We put it in the newspaper, on the internet and even tried the TV! After three weeks, we had about five visits and several phone calls but no offer yet. The owner of the house we wanted to buy we still having visits and phone calls as we only made a conditional offer. After a month, even though we already spent about $1,000 in ads, we decided to accelerate the process and give the mandate to a real estate agent. Big mistake!
No results whatsoever
I wrote in my introduction that I have a tendency of doing things myself when it comes down to finance. Well I should have done it in this case! We kept having the same rate of visits per week and most of the time, the potential buyers were coming from other agents, not even ours! In the end, it took him four additional months to sell our property and he convinced us to drop our asking price by a couple of thousands in order to make sure we don’t scare the people away.
How much does it cost?
Since he “sold” my property, I had to pay him a pretty fat commission. 5% of the selling price were making 10K that I could have keep for myself. Instead, the agent simply created additional miscommunication between all parties. In result of this communication breakdown, I had to pay an additional $600 in interest penalty to the buyers. This fee could have been easily avoided if communication were related to each party properly. As we have no right (or so every agent is telling us) to contact the other party without going through any real estate agent, it just creates a big mess.
The reason why it is my favourite money mistake is because even if I loss 10K out of this story, I learned a lot from it:
#1 The use of a real estate agent does not accelerate of your property
#2 They cost way too much for the service they provide
#3 They add more confusion and miscommunication as the buy and the seller can not talk to each other directly
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