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My Best and Worst Money Moves Ever (So Far!)

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While I’ve only really had to directly deal with finances for the last five years or so, when I look back at my home purchase a year and a half ago I both wince in pain and smile in delight. See, when I purchased my home, I made what I considered my best money move ever (to date of course) and my worst money move ever in two aspects of the purchase.

The Best

My best money move was in the purchase price of the home. When we were looking, the housing market sizzling hot with homes having open houses on Sundays and signing contracts on Tuesdays. Houses were going above their listing price, bidding wars were erupting, and it was a feeding frenzy. If you were a seller, you held all the cards and you played them. We put a bid on three houses, none of which were even in the running, before we put a bid on the house we eventually owned.

So why was this the best money move ever? My offer was for $295,000 and that the seller could continuing living there for two months, paying me for my carrying costs. A competing offer was for $330,000, all cash, but the seller couldn’t live in the house for a few more months. In fact, my realtor found out that the other offer had up to $350,000 in cash (something the seller’s agent disclosed to try to drive up my offer). I knew that the sellers had purchased a home in Mt. Airy and were looking to move but that seller hadn’t found a new home yet and so they were delaying the process. My seller wanted to sell their house as soon as possible so they could afford their new house and were in a bit of a bind, I was third in line in this real estate love triangle.

So when my realtor asked me whether I wanted to increase my offer, I told her no. Here was my reasoning:

  1. Why were they asking me for a counter-offer if the higher bid was a good $35,000 higher? I reasoned that it was because they found the other part of my offer, that they could stay for two months, very appealing (they almost required it) and so they wanted to see if I would move.
  2. The seller’s agent disclosing that the other bidder had $350,000 had the opposite effect of what she intended. There was no way I could beat someone with $350,000 in cash… I had to live or die by the other clauses in the contract, not the $$$ ones.

So I crossed my fingers, waited, and learned a couple days later that I won… even though I offered $35,000 less. That was, by far, my best money move ever.

The Worst

Now, my worst… you could argue that buying a house near the peak of a housing market was pretty stupid. However, hindsight is twenty-twenty and if housing prices begin to sag (they haven’t in this area yet), maybe it will be my worst money move. However, I think my worst money move was when I didn’t negotiate any of my lender fees down. I paid all those stupid administrative fees and document fees because I felt I was under the gun to close in two weeks (another contingency in the contract). In reality, I probably wasn’t under so much pressure and could’ve negotiated some of those down. In the end, I think it cost me a thousand dollars or more across two loans (first and second mortgage).

So, there you have it… my best and worst money moves ever. Now bloggers out there, if you want to write about your own best and worst money moves ever, post it and link back to here (or email me) and we can start some sort of list. Hopefully it can be an educational experience for everyone and we can learn from each other’s mistakes!

Other Best and Worst Money Moves Ever:

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11 Responses to “My Best and Worst Money Moves Ever (So Far!)”

  1. CK says:

    Am I reading this right? The seller turned down an extra 45K just so they wouldn’t have to find temp housing for a few months?

  2. jim says:

    “Only” $35K but yeah… it was a gamble on my part but it worked so I’m happy…

  3. CK says:

    I just can’t fathom why they would do that. I would live in a box for two months for 35K.

  4. jim says:

    I can’t really understand why either but they were a little older (maybe in their 50s), had three dogs, and probably were making a killing on the house and preferred convenience over more money?

  5. Mike says:

    If that’s your worst money move ever, then you should be jumping for joy.

  6. Foobarista says:

    I actually got lucky with this sort of thing on the other side. The market was jumping, and I had to sell my old condo that I had lived in but had been renting out since it wasn’t far from my “free three years” (you can sell a property without cap gains taxes if you have lived in it for 2 of the prior 5 years – I had been renting it out for close to 3 by then). Instead of kicking the tenant out once their lease was up – as the RE agent/property manager had advised – I let them stay on a month-to-month lease until they found another place after giving them a chance to buy. They stayed for three months, after which I sold the place for about $40K more than I had planned.

  7. Anonymous says:

    I bet someone else in your household would believe that one of your best money moves was getting your fiance to say yes :)

  8. Congratulations on the purchase of your home.

    There is no doubt that your successful NEGOTIATION should be considered a “good move”, however to consider the result of your negotiations your “BEST money move so far” is YET to be determined- the truth is that only time will tell.

    To truly determine the overall and long term value of your negotiations there are many factors which you need to analyze (and quite frankly most of these factors should always be weighed PRIOR to making such a decision). Among these factors the following two have the most bearing:

    1) The terms used to finance the transaction:
    a) interest rate
    b) length of time financing
    c) amount of down payment used
    2) The actual costs of ownership:
    a) Property Taxes
    b) Insurance
    c) Maintenance of property
    d) Association fees etc.

    Market timing, on the other hand, will have very little relevance (if any relevance at all) in the overall LONG TERM return of your investment. That is to say if you are planning on buying and holding a property for a LONG period of time, and NOT simply looking at “flipping” a property for a short term profit then market timing is something you should not worry about.

    In most cases, however, (not all- there are a FEW exceptions to this) to tie-up equity in your home during your income producing years is a “bad move”, although most financial planners will tell you the contrary.

    Since the majority of the people and our financial planning community have bought into the “myth of home ownership”, it continues to ensue in most everyone’s financial picture.

    Very little analysis is often put into the purchase of real estate- partially because we are so focused in “negotiating a good deal”. Most overlooked however are the costs and expenses in owning the real estate over a long period of time.

    Once you factor in interest, insurance, taxes, maintenance and inflation very few home purchases even come close to “breaking even” after 25 to 30 years of ownership. Yet most seem content to point out how much they bought a property for 20-30 years ago and compare it to what they sold it for today. They all seem to forget how much money it actually cost them to have that property for all that time.

    Disclaimer for the squeamish: I am a commission based Financial Planner who specializes in what would be considered unconventional Financial Planning. On my downtime I humbly enjoy participating and dispelling conventional financial beliefs on this, my favorite blog, and many other blogs. As difficult as it may be to actually find one, I do not recommend, however, that you implement any financial strategy without the guidance of a competent professional. Please continue to visit Blueprint for Financial Prosperity and feel free to visit my lens at: http://www.squidoo.com/yourmoney/

    As for my BEST financial decision I would have to say that starting my OWN business and investing my capital into MYSELF rather than giving it to someone else to manage has been, by far, my best financial move.

    My worst financial move was having remained an employee for many years thinking I did not have enough capital to go out on my own. It took me long to realize that I had all the capital I was ever going to need right inside my HEAD. I now realize that no amount of money could ever surpass a persons will and imagination.

  9. Amanda says:

    Great post, Jim! I added my Best and Worst on Y&B this morning:

    http://youngandbroke.typepad.com/young_and_broke/2006/11/my_best_and_wor.html

  10. Star Money Articles for the Week of Nov. 6

    Here are interesting posts and news this week from the MoneyBlogNetwork members and beyond: Five Cent Nickel lists his UPS holiday shipping projection. Blueprint for Financial Prosperity lists his (and others’) best and worst money moves ever. Consume…


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