Gregory Bain

How car dealers and real estate sales people do Business

Yesterday, my wife and I ventured out to replace our aging (2002) car. It still runs good and has no major dents, but with 160,000 miles on it, it is time to consider a newer model. We don't buy new or extravagant. Our credit score is as good as it gets for a family that is the opposite end of anal in regards to almost everything in life. But, we do seem obsessive about paying our bills.

Anyway, a local dealership was running a full page advertisement in the Sunday newspaper (dealerships are closed on Sunday in New Jersey as one of the last "blue laws") for a great price on some used cars. Within the advertisement is a monthly payment plan for those who qualify (we qualify). And, as chance would have it, right at the top of the ad, is the very model we drive. Only it is newer and with a whole lot less mileage which would be very affordable to us right now.

We should go take a look at this car, I tell my wife. She agrees. Monday the newspaper comes and there again is the advertisement. Selling houses, I know the cost of advertising and this dealer is spending big bucks to get people to come in and look buy. The automobiles advertised all have their "blue book" value printed and the BIG discount the dealership is offering. Real estate doesn't have a "blue book" for house values yet but some buyers like to use one or more of the Internet web sites to come up with a "suggested retail price". Moreover, my own trade organization (NAR) is trying to develop such a system that may make the old comparative marketing analysis that agents offer for free to both the seller and buyer clients (not customers) obsolete. Well, not to get off topic, we are very happy with our old car and replacing it with a newer model of the same brand appeals to us.

On Monday afternoon we drive to the dealer (after a few clicks of the computer mouse to find the current value of our car) to see the advertised vehicles. On the way we discuss the common tricks we may encounter at the dealership. You may know some of them and call it something different than I. But, the fact that someone could have purchased the car just moments from our arrival could be a very real situation. And, knowing that the dealer advertises that he has 32 to more of the same model car in stock would mean they would try to sell you one of the many other cars that may be similar in price and size.

BINGO! We are correct. The car is long gone and, "Would we like to see something similar?," is asked of us? Yes, of course, we are interested buyers. We follow the young man over to a table and explain that it was the monthly payment for that style car that made us come in to shop. "No problem. Do we want to trade in the car we arrived in?," was asked. Yes we would like to rid ourselves of the other car. And, we surrender our keys so that their mechanic can give it a once over. Next, he asks, "If he can get me a similar car will we buy it today?" My wife and I give each other the eye and state that it would dependent upon the car and price. The salesman makes note of this and asks me to initial his note. I am stunned. He wants me to initial a hand written note that states I will buy a car if he finds one similar to the one I came into buy. That's alright. I am looking to buy and I don't intend to waste anyone's time and I kind of like the idea of him trying to work his commitment to buy on me. Every day I learn something from someone. Now the fun begins.

We go to a car similar in the advertisement (parked right in front of the door) that is a year newer and with about 6000 more miles on it. I can't believe a car newer than the one advertised is being shown to me as a replacement for the car we missed out on buying. He won't give me price but, I am thinking it must be a lot more money than the advertised car. I again state that the price is the major factor in us buying a car. But, the salesman has us get in and take the car for a test drive. Do I like it? What's not to like about a car that is one year newer than the one I was hoping to buy at a discount. So, I start thinking that maybe I am wrong in my assumption about the sales style I am about to undergo.We go back inside the showroom and sit down while they go over to see about what they can do for me as far as price. But, he will need to run my credit to be sure to give me the best terms available. He is just about doing cart wheels across the room when he sees the credit rating. Yet, we must wait some more. A short recap is in order here. We want a newer car. We see an advertisement and go to the dealer. They take our keys to our car and run our credit. We wait.

After a long wait, the salesman comes back acting all happy. Well, no that would be wrong. He comes back and starts to tell us its "bad news" about our credit (as if I didn't see his "happy dance"). No, he is only joking. We have great credit and here on the back of the paper he is holding is the deal they want to offer us. Drum roll, please. The number is almost a hundred dollars more than what we told him we wanted as a monthly figure. I am shocked. I expected him to be about 10 to 20 dollars higher with our trade-in and them wanting a thousand dollars or so to add to the closing transaction (why waste our time if you can not sell for the advertised price?). No! That's not going to work mister salesman. Thanks, but no thanks. Let us know if you get any more deals like the one you advertised. Call me. I'll come back, I don't need to buy tonight.

Wait. Let's talk about this says the used car salesman. And off he goes to talk to his manager and asks about the other cars available for us (the ad said 32 of the same model as advertised and their web site has several used but won't give a price for any of them). He comes back with keys to a car that is newer than the one advertised but a little smaller asking about forty dollars more per month than the monthly payment that they advertised. So, I'm starting to think that the price of cars is much more than what I had gathered from the advertised deals. Maybe we can spend forty more dollars per month for some good transportation? I get in to take a test drive and I am told that this is not the car that I would be buying but similar to it since it is on their other lot. Huh?

O.K., I drive over to the other lot in a car that is not bad but not what I had wanted in size and more than I had wanted to pay in price. The color of the other car at his sister lot was not bad but the interior that was a turn off to both me and my wife. Driving back to our car at the showroom (again, they have the keys to our car) we tell the salesman it is not for us and he can call us when something else comes in. At that he pleads that we go back inside and that he will try harder to find us the best deal because "he works for us" not the dealer. However, if we don't agree to go back inside the boss will think he did something wrong and may fire him.

Inside the showroom the manager comes over and wants to make us an offer to help us with the payment for the first two years. Now, the payment plans have stretched a year longer and the payments would be lower for two years and higher from the third year into the seventh year (seven years to pay for a car but the mortgage bankers don't want to offer a 40 and fifty year mortgage loan to buy a house). No, this car and payment plan will not fit into our budget. Thanks we have got to run now. Of course, we must wait again. Because he may be able to get us a better deal if we just let him make a few telephone calls. The deal of the night? Zero down. Pay nothing for 90 days. Pay your agreed payment price for two years and then the payment jumps to almost a hundred dollars more for 63 months. Damn I wish my cell phone had an app for that! No. We still drive a car with 160,000 miles on it.

O.K., I don't get it. How are real estate sales people like used car dealers?

I just read Liz Moras' blog titled: You Think Your House is Worth WHAT?? Pricing Your Home to Sell. It had some very good comments by various agents from all over the country. So, this is not just a Little Egg Harbor/Tuckerton area phenomenon. I posted the following comment to her blog:

I do NOT get the listings. Why? I tell them the truth right from the start. But, I do get a very rewarding self satisfaction in watching the list and sale unfold. No disrespect to those agents who know how to "work" it. It must take a lot of marketing ability to take and hold on to such listings. I just watched a house go to closing after 885 days on the market. The owner stayed with the same agent the whole time. She started at $850,000 when nothing was selling over $500,000. Worked him down to $740,000 after 60 days, $699,900 in 80 days, $659,900 in 135 days. It was like watching a stone travel to the bottom of the fish tank. The conversations between the agent and owner must have been a work of art to behold. By the end of the 6 month listing she had him down to $599,900. At 690 DOM she had talked him down to $410,000 only to get him to reduce it again in 2 days to just under the $400,000 mark to $397,700. At eight hundred and five days on the market they reduced it to $367,000 and SOLD it for $355,000. I just wish I could be half the salesman that that lady is. I sit in awe

My comment is from watching a house in our local area go from list to sale. You may not want to hire the agent that tells you the highest price when shopping for an agent to SELL your home.

Seller BEWARE!

Buying Real Estate is like buying a suit

I was inspired to post this blog after reading "Know your value, and tailor your business for your client's needs." with emphasis on tailor and the other blog titled "The Elusiveness of the Exclusive MLS" which begs the question; IS all real estate local? So, I retell (original author = unknown) this old story hoping to get your thoughts on what it means to service the client.

A guy walks into a haberdasher's shop and says, "I want a custom suit off the rack." The salesman tells the customer that they don't have any custom made suits on the rack. The guy walks out of the store angry and goes up town to a large retail store that sells men's clothing. There he finds a suit he likes but no one in the store can make the necessary adjustments. He buys the suit and drives back to the haberdasher's shop near his home and tells the salesman he wants the cuff hemmed, the seat let out while the waist needs to be taken in just a bit. Also, he would like the jacket sleeves to be a little longer and his shoulders to move more freely. Making note of the many adjustments with measuring tape and chalk, the salesman tells the customer to leave the suit and come back in four days for his final fitting. The customer agrees and leaves the shop happy..

Four days later, the man returns to try on the suit. It fits perfectly. The man is very happy and pays the salesman the charge in full, which is about the same amount as what he paid for the suit at the discount chain store up town. The salesman was confused and asked the customer why he bought a single breasted suit off the rack at a discount store and then willingly paid to have it customized at his store. The customer told him he stopped at their shop first and was told they don't sell custom suits off the rack. He wanted the suit that day and the discount store had what he wanted. "But", the salesman said, "that is no longer a suit off the rack and you didn't get the suit the same day. All those alterations make it a custom suit that you had to wait four days for it to be made to fit. We alter and adjust our suits for free for the same four days you waited for this suit to be made custom." To this the customer said, "Oh!"

So what does that have to do with real estate? EVERYTHING! Like the suit, a customer can buy a house off the rack from any discount chain store. Most likely, the salesperson at the chain store will provide the limited service needed to ring up the sale. However, if the customer had asked the salesperson a few of the custom service questions they most certainly would have shopped at the smaller haberdasher's shop. What are those custom questions? There are many questions that the out of area agent will not be able to answer, but here are a few for you to think about:

A). what are the schools like? Since those out of area agents don't have any children attending they can't give an opinion. They will just direct you to a web site.

B). Does this street flood? They don't live in the area and could not know which streets have frequent flooding problems.

C). what is the commute and traffic like? Well, if you think the time and distance travel of MapQuest is going to tell you correct information on rush hour traffic - go with that out of area agent.

D). is it hard to get a permit to do xyz? Well, even some local agents can't help you with that kind o f question if they don't attend any township meetings.

The other day Greg Nino of Houston Texas wrote a Blog about the use of video as a tool to provide blogs that are NOT boring called Video Blogs & Why A lot Of Them Could Be So Much Better. He pointed out that such videos should be fun and point out a blog from a couple of guys from Think Big Work Small, or, the TBWS daily. I didn't really think too much of the "fun" video other than the sound did not match the mouths of the two men giving commentary to the world economics. But, I did think that maybe I should use my YouTube account to start providing customers with more information when they ask for it. So, I put this up the next day when I received an email regarding a listing of mine. What do you think? I can't say it is "fun" but I was asked by the customer about additional information after she reviewed it. So.... I made this new video for her. what do think? Is this what our clients want from us?

Is it the Insurance or the Health Care?

I am very lucky. I have great insurance thru my wife's job. When I broke my arm there was no issue as to getting it fixed. If I get a cold I just go and get a prescription for the antibiotics and whatever else the Doctor orders for the cure and pay both doctor and pharmacist my co-pay. As a matter of fact, it is such a great policy I've gotten my son care when where his friends got none. If I had to have paid for the services I could not have done so without a good credit card and making payments over time.

I am always floored by the cost of health care whenever I see one of the bills that was sent to the insurance carrier and was denied payment. I get a copy and both the doctor and the insurance company expect me to straighten it out. Sometimes the doctor wants me to pay it in full. Maybe you have insurance and agree with me about costs? Maybe you have seen the original bill for the care you received with all the charges assigned by the coded procedure with a special number? But, did you ever notice the adjustment in price for the insurance carrier? The bill is almost cut in half for all the charges. I sometimes think that if we were all just charged the amount the insurance company pays out, then we could all afford the health care.

Anyway, today I am more concerned about the care we get than the insurance we have to pay for it. Take my injury of a broken arm. I waited for the ambulance to transport me to the emergency room. The driver and EMT were very nice as they filled out their paperwork before allowing me to get into the ambulance. You know, insurance, or, how was I going to pay for the ride. Well, they never really secured the arm and after a few bumps in the road - it was a compound fracture. That would be the bone sticking out of the skin with blood leaking down.

O.K., life is hard sometimes. But, the x-ray technician had a heart of stone that day. She was as unfeeling has the lead vest she never gave me to wear. Wow. It is a good thing the attending physician had given me some powerful pain medicine before that technician came along. There is no other way to say it, it hurt like hell the way she push and shoved my arm around to get the picture she was required to take. So, O.K. she was just one bad experience in the health care system. I have a few other stories I could tell, but you get my point.

But, let me tell you about my 84 year old mother-in-law. She worked the American promise. She had a good job for most of her employed years and had a great insurance program with it. That insurance stopped when she stopped (retired) working. To make up for that lack of insurance she paid into a system that gave her a supplemental insurance program to cover over the Medicare system that is part of the social security system we have in America. She uses her small pension and social security along with part of her savings every month to pay for her living quarters. The other day she called us and wanted some Tylenol to be delivered to her because she was sore from "too much exercise". Turns out she was hurting more than Tylenol would take care of, so it was off to the emergency room.

There she was chipper while being administered several tests to identify the problem causing her pain. She was chipper that is until she went in for the CAT scan. You see, like many older ladies, my mother-in-law is hunched over. Maybe it is the result of osteoporosis, I don't know. I just know she is old and bent over as if she is always standing inside the confines of her walker. Before this hospital administered test was the last time any family member would see her smile. Her pain went from a 10 to off the charts in just a nanosecond. Why? She was forced into a position that was "required" for the technician to get the desired image to give to the doctor.

Couldn't the technician see that the patient was "bent over"? That as an elderly person it would be impossible to lay flat on her back? How do these people get their training? Why did a doctor order the test when he could see the patient would not be able to lay flat on her back? Is there no alternative to getting the diagnosis than torture for the patient? Is there no muscle relaxer that could be administered prior to placing someone in a position that is un-natural for them? This is not health care.