JoeTaxpayer

This is a Money Mavens Network post, the first of many to come. This time, a number of the Mavens will be writing on the topic of using a Real Estate broker to sell your house. (We’ve not seen each others’ posts before publishing, so any similarities are purely from the category of “great minds thinking alike.”)

A few years ago, pre-crash, a neighbor put his house on the market. When it sold within two days of being listed, I found it odd that he seemed so happy with himself. I told him,”sorry, but I think you got Freaked.” I told him that I had read the book Freakonomics, and was recalling a chapter that discussed the conflicting motivation that a real estate broker had. The author cites a study that showed, all things being equal, an agent will sell his or her own home for an average 3% more than the same home sold for a client.  It turns out that when selling your home, an additional $20,000 may be quite a bit of money to you (as it is to me) but on a 6% commission, that’s $1200. Once it’s split between the listing agent and yours, and your agent splits half with her office, it’s a $300 difference. I went on to explain to my not-happy-as-before neighbor that the very fact that it sold so quick should make it obvious the price was set too low. In his case, the Zillow estimate was nearly $30,000 higher than his sale price and I thought he’d have at least split that difference had he set the listing price higher. Of course the agent’s economic interest was best served by a fast sale. I won’t even try to calculate the hourly return the commission brought her. In the end, the impact to my neighbor was far greater than the 6% listing fee. On a lighter note, this was a neighbor I wasn’t sorry to see move, a bit of schadenfreude, I suppose.

Recently when a friend told me she was putting her house up for sale, I walked her through the story above, explaining the math, the 1.5% of the increase/decrease in price being all the agent gets and leaving her with the warning that the agent is not her friend. To be fair, real estate agents are in a better position to move a house than most of us might be. Buyers are coming to them, and through MLS and their own networks have access to more information than you or I might. On the other hand, the internet along with market pressure is fast eroding that advantage.

Check out my fellow Mavens posts as well:
Len Penzo -  Real Estate Agents: Why You Rarely Get What You Pay For
The Financial Blogger at Green Panda Treehouse – Would You Take A Realtor To Sell Your House?
Tom at Canadian Fiance Blog – Should You Use A Real Estate Agent To Sell Your House?
Paul at Fiscal Geek – Should I Use a Realtor to Sell My House?

Joe

Another year, another set of tax returns behind us. Everyone has a different view on taxes and whether getting a refund is a good thing. For some, the refund acts like a forced savings plan, for me, it’s a sign that I lent Uncle Sam money at zero interest. I prefer to pay. In fact, I prefer to owe just enough that I am shy of owing a penalty as well. But that’s just me. On to this week’s reading recap:

Green Panda Treehouse explains Why the US Govt Likes a Weak Dollar For Now. I’ve always found discussions of the dollar’s value to be tough to understand, even in grad school where apparently I understood it well enough to maintain a decent GPA. Low interest rates keep the dollar week, but high rates in turn push the dollar higher. I agree that the economy can benefit from sustained low rates.

Alan Schram guest posted at Canadian Finance Blog about Reward Points, Loyalty Cards, and Lies. So long as the reward/loyalty cards don’t entice you to spend more than you would otherwise, it’s not a bad idea to take advantage of the benefits you can get. Me, for credit cards, I’ll stick with my Fidelity 529 College Rewards Card which puts 2% cash into a college savings account. No annual fee, either.

Len Penzo answers, Expedia, Orbitz, Priceline and Others: What’s the Best Travel Search Engine? Let compares two different trips among six different online travel sites. An intersting comparison, no clear winner.

Mike at The Oblivious Investor talks about Using Annuities to Protect Inheritance. I should note that while I tend to be anti-annuity, I’m open to the proper use of an immediate, fixed annuity, which is what Mike is discussing in this article. I think most of us are simply looking to plan to make it through retirement without depleting our savings let alone planning to leave our kids an inheritance. Mike offers some sound advice that can help with that effort even if leaving money isn’t part of your plan.

Austin Morgan offered My Curriculum for Money Education in High School. Some great thoughts here, he spells out the full curriculum for two classes that high schoolers would take. I find the lack of a basic understanding of finance to be prevalent and I’d support any effort to add finance to the basic high school curriculum.

Last, but one that stuck with me was Peter Anderson’s Bible Money Matters post on the 7 Lies About Money That Can Kill Your Financial Future. Of Peter’s seven, I’ll share the one that occurs to me most (as a misconception.) Number 6 “Having expensive things means that you’re successful.” I’ve known this to be false for some time, and my observation was confirmed by Dr Thomas Stanley’s book Stop Acting Rich, which I read and reviewed a couple weeks back.  Some thought provoking ideas here, Peter, nice work.

Enjoy the week,

Joe

I have been a fan of NASA for as long as I can remember. I followed the Apollo missions and recall the excitement of the manned trips to the moon. It’s unfortunate that government sponsored space exploration may be a thing of the past, but hopefully, the private sector can pick up where NASA left off.

Joe

Time waits for no one.
Today, I’m proud to offer a guest post on the TurboTax Blog titled How to File An Extension. A simple process if you need to do it, along with some advice to do it right. Happy Tax Day!

Joe