I believe many of us get into our career path because we are trying to repair an old hurt or inadequacy. For the first half of my life, real estate agents hurt more than helped me. By the time I’d determined to get my license in 1993, I’d developed a healthy distrust and dislike of all real estate people.
When I bought my first US property in 1980, I ended up working with an agent by the name of Jim, who knew he had a very naive 20-something on his hands.
Jim offered to help me out because the financing had fallen thru at the last minute on a condo I was planning to buy on the west end of Denver near Golden. I thought the condo selling agents had taken care of all that (Mistake #1). We had a closing date set and I had given notice on my apartment and my roommate had found somewhere else to live.
A few weeks before closing I was told the CHAFA loan had been denied because I hadn’t been working long enough. Yet I had told the seller agents exactly how long I’d been working! So this came as a shock.
I was pretty upset with the agent, so she referred me to a friend of hers. (Mistake #2) Jim seemed to empathize with my predicament, so I went with him to look at ….well yes, HIS listing (Mistake #3) located in a gay-hispanic part of south downtown.
I knew how to speak Spanish, and had gay friends, so I was delighted with the property. This turn-of-the century little house was so, well, cute. Is it any surprise to you that I discovered too late that my earlier condo location would have been a much better investment? It wasn’t as “cute” but it was newly remodeled and in an outstanding location. The condo appreciated $80,000 within a few years. That fish got away.
Jim told me I could assume the loan on the cute house, so no need to worry about qualifying. It was a good interest rate and I was desperate, so I hesitated. However, Jim told me I needed to decide quickly, as there were other offers coming in. Listening to this was mistake #4.
Being the naive 20-something, I didn’t even consider the fact that it was his own listing or that I was being subjected to sales tactics. I didn’t even consider asking my parents for advise because 20-somethings already know everything, right? (Mistake #5)
I bought the home and didn’t even know what hit me until years later when I was completely fed up with the annual burglaries in spite of my black german shepard guard dog & security system.
I still didn’t know I had made the wrong investment when I decided to rent it out a few years later and had no clue about how to manage property in a poor neighborhood. (Mistake #6)
I didn’t know I had made the wrong investment until 10 years later, when I finally was faced with filing for bankruptcy or getting rid of this property.
I lucked out and found a man who would assume the loan from me. The balance on the loan was 30% less than I had paid for it 10 years earlier.
The real estate agent I had bought it from had assured me I couldn’t ever lose money on a real estate investment if I just held on to it for a few years- (Mistake #7).
He said it was a great neighborhood with great potential and would sure appreciate.
This was the beginning of my real estate investment career. I learned that real estate investing was dangerous if you have the wrong people helping you and bad information. I learned that real estate agents did not have the primary aim of protecting me. Rather, their primary aim was earning a commission, and I use the term “earning” loosely here.
If anyone is still interested, I’ll make yet another post about more lessons I learned with my second experience with a real estate agent, about 11 years later. I lost another potential 100K by listening to my agent’s advise instead of trusting my own instincts.