Austin Buyers and Sellers-How Much is a Dollar Worth to You?

image of a dollar

Last year I made (saved) $120 by spending 3 minutes on the telephone. All I did was call Sheraton Hotel in Seattle and say “I’d like to convert my reservation to the internet rate“. A couple of minutes later it was done. No fuss about it. I then paid $30 less per night during our 4 night stay, saving me $120 plus whatever the taxes would have been on the extra $120, so probably more like $150. That paid for all of mine and Sylvia’s dining out.

Why didn’t I make the original reservation with the internet rate? Because the “internet rate” is non-refundable and is charged to the credit card immediately. The “normal” reservation is refundable and you don’t pay until you stay. A lot can happen in the two or three months between a hotel reservation and an arrival, so paying in full months in advance, and having it be non-refundable, just isn’t the best way to manage your travel expenses. The smart-money thing to do is make a fully refundable hotel reservation and convert it just prior to your arrival, thereby receiving the benefits of a refundable reservation at the discounted non-refundable price.

I use this example because so much of our modern money management efforts require knowing stuff and doing something extra as a result of what you know. Prices that seem “cheaper” are often not, especially in the airline and hotel industry when you factor in the risk value of up front non-refundable charges. And they gloss over that small detail that when you make the reservation (and/or you don’t read the fine print). You have to know about it, or learn about it the unfortunate way, when life circumstances force the cancellation of a trip.

I bring up this topic because so many real estate consumers get bogged down in the infinitesimally small cost factors of buying and owning a home, as if the homes we live in are the only source of expenses and savings in life. And, as American consumers, we often remain blissfully unaware of the multitude of simple things that can be done daily to, as Clark Howard puts it, save more, spend less, and avoid being ripped off.

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What you need to know vs. what you want to hear

If an investor or buyer wants to purchase a home and is ready to write up the offer and move forward, what should a good Realtor do? Unfortunately, many will of course write up the deal immediately and mentally deposit the commission, and perhaps already have it spent. This isn’t the type of Realtor you want to work with.

Instead, you want a Realtor who will ask a lot of questions and provide more information. One who will, in a sense, make you justify why this purchase is the one that best accomplishes the outcome you seek.

Purchasing real estate is an emotional decision, but one which must be supported and justified by non-emotional considerations, namely the financial side of the equation. In helping the number of buyers we have, Sylvia and I observe, as one would expect, that different buyers operate from each end of the spectrum, from emotional to financial, and at all points in between. But no decision made entirely based on emotion or numbers can be the best decision. A balanced blend of the emotional and financial considerations will result in the “smartest” decision.

Some buyers are so fixated on the “numbers” that they are blind to other realities, such as the fact that the cheap crackerbox starter home being contemplated is way too far from everything and comes with serious risks due to it’s stage in the neighborhood life cycle, poor schools and unpredictable and undefined development of the surrounding areas.  But it’s “cheap”, and that seems to override the thought process if left unchallenged.

Others fall so in love with a property that they engage in a willing suspension of scrutiny on other important considerations, and operate instead from a place a happy denial. The home doesn’t fit with the stated criteria or needs, it’s over priced and it has misfit attributes such as a super steep driveway or backs up to a very busy street, yet the buyer fixates on something mundane such as, “it has a magnolia tree … we had a magnolia tree growing up and I’ve always wanted a home with one. My mother loved Magnolia trees”.

This is the point of recking for the Realtor. As a buyer, do you want to “hear what you want to hear” or do you want to “know what you need to know”?

Should the Realtor say, “oh, I love magnolia trees too, and if your heart is saying this house is the one, then let’s do it!”

Or should the Realtor say, “you can purchase and plant a 10ft tall magnolia tree at any home for about $200-$300, so let’s not allow that to be a deciding factor”.

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