Posted by Chuck (AZ) on July 20, 2001 at 01:09:08:
This is going to be a long answer to a short question.
Let’s say that I decided I want a big screen tv. So I go down to the store, pick one out and they finance it in-house. It’s delivered and I toss my 27" into the den (or wherever).
Did I -need- a big screen tv? No, the 27" worked just fine. Did I -want- a big screen tv? Obviously I did.
Now let’s move this up a notch.
Let’s say I’m tired of renting and want to own my own home. After looking around, I decide that a mobile home (as opposed to a house) would be easier on my budget.
I look at several and find one that that I like. It’s $50k. I jump thru the hoops to get into the home, and some months later something happens that causes me a financial hardship… the “dream home” is now a monster.
Now obviously, I need to get out from under this burden, but that’s not the real point here. The point is that a $5-10k mobile would have served the same purpose, and I wouldn’t be scrambling financially if I had bought it, instead of the $50k one.
Did I -really- need a $50k mobile to provide a roof over my head? No, no more so than I needed a big screen tv to watch my favorite show. Unfortunately, I didn’t realize that at the time.
Now you can change these numbers and items to fit any purchase that you’ll ever make… a tv, a home, a car, and so on… the point being you should only buy what you can afford. Failure to do this has resulted in more financial hardship for people than you can shake a stick at.
Proof of this is evident all over this website. I can’t count the number of posts that go…" we bought this home for $100k and now we can’t afford the payments. What do we do?"… or words to that effect.
How many of these $100k homes would have been sold, IF the buyer had been required to pay $10k in non-refundable ernest money up front?
If you’ve been in “sales” for any length of time, you know that you get ALOT of tire-kickers. People that WANT but don’t truly NEED, what your selling.
How do you weed them out? Ernest money. If they can’t afford to pay it/or aren’t willing to, then they can’t afford to buy it, or truly aren’t interested in buying.
Now, as to having 5 buyers for the same mobile… obviously he can’t sell this home 5 times to 5 different people. But he CAN secure their WILLINGNESS to buy via the ernest money, and thus has 5 (almost) guaranteed buyers, 4 of which will be his next 4 deals.
Assuming they pass “muster” that is.
One more comment…
If you look at mobile home dealer ads, you’ll see alot of them offer things like free credit checks, and the like.
Did you know it’s illegal to take a credit application and charge a processing fee for doing so? Did you know that it’s illegal to REFUSE to take a credit application? …even from the tire-kickers.
It’s NOT illegal to ask for a reasonable amount of non-refundable ernest money. I did it 3 times alone this week ($1,000/$1,000/$500), on 3 seperate deals. All of which I closed. I also dealt with just as many tire-kickers.
I recently took bids for tree-trimming and structure cutting in my MHP. Like all good businessmen, I went with the lowest bid. (NASA does the same thing, kinda scarry huh?).
I waited 6 weeks thru numberous delays about “why we can’t get there today”, before I hired the next highest bidder. He showed up on time, when promised, and did a excellant job. He also referred me to a landscaper that I retained for another project… he also showed up on time, and did a excellant job.
Now I would have been happy with JUST this, but something else happened this week BECAUSE they were here.
I sold a mobile to the tree guy, and the landscaper is on my list for the next good deal I come across.