“I have sold cars for less than I paid… That was when I felt I had made a mistake”“What he paid has no real bearing on the worth of that vehicle.”
If you substitute “houses” and “house” for “cars” and “vehicles”, that is the whole thing in a nut shell.
You know that is how business works, and I know that is how business works but a lot of people don’t. I suspect the lady with the torn up house doesn’t know that yet, though she will before she is finished.
These are the kind of things that keep people poor and there is no need for it. A little education in business and economics would improve everyone’s ability to plan and make financial decisions. But where is it? I had to learn for myself just like you did. This board is a tremendous resource for opening people’s eyes to the opportunities that are all around them. If everyone knew how to plan, work and make good decisions there is no reason for anyone in the world to be poor.
What are some sellers SMOKIN? - Posted by Corey ND
Posted by Corey ND on October 09, 2002 at 21:07:32:
See ad in paper today. 3 bed 2 bath. Drive by house. It is a “work in progress”. New windows and new doors. Siding around doors and windows is all cut up. Needs paint bad. Yard is a TOTAL mess. Back porch is ready to fall in. Garage has a dirt floor and is not in very good shape. Knowing my local market experience (was a Realtor for 2 years), I thought OK this one should sell for upper 20’s and if the seller was lucky low 30’s. SO I call the gal up. She tells me about how her and the husband buy house and “start” to renovate the property and then he takes off. House has a fair amount of work to be done. SO now I am thinking lower 20’s. I ask her finally what she is asking on the house. She says $74,000. WHAT!!
This gal is in serious denial.
What do you do with a seller like this? You don’t want to insult her but someone needs to let her know she is WAY off base.
One of those deals where you leave a card and say call me when your ready to sell?
Posted by Corey ND on October 10, 2002 at 19:23:07:
Just went and looked at the place. It was torn apart. Meaning that it was under construction but never finished. Flooring cut up. Walls partially torn down, YOU NAME it is was torn up. Driving by yesterday I would have given her 25K. After seeing it today I wouldn’t give her 20K. Like I said I know my market well and this gal is smokin CRACK!
Didn’t even bother giving her a card. This was her grandmothers house and of course has sentimental value. SO I didn’t feel like being the bearer of bad news.
Most people don’t have a clue about money, investing or financial matters. If they need $74,000 to get clear of the deal that’s all they think of. It never occurs to them to ask why anyone should pay that much. They “need” $74,000 and anything less is “stealing”.
Oddly enough, people never expect to get more than what they paid for a car they have owned for 5 years but they do for a house. They have been conditioned that it works that way but they couldn’t explain why.
Watch this, it’s a laugh. Go into a used car lot and offer a real low price for a used car. Wait for the dealer to say “Why we paid more for it than that!” This is where the rubes fold as if there was a law against selling a car for less than you paid. Instead try saying “I’ll tell you what, give me what I paid for my trade in and I’ll give you what you paid for yours”. The rubes never ask why they should give the dealer more than he paid, when the dealer never gave a rube more than he paid.
If you can, print out the comparable sales for the neighborhood. If you can show her that 15 properties sold for 20’s and 30’s prices you have alot more justification. Some people really just don’t have a clue what the true value is and you have to bring them down from the clouds.
Oh, I wasn’t thinking of spending that much of my cash for a property needing this much work. I think the most I could pay cash would be about $25k if I really looked into how much all this work will cost. Here is my card though so if things don’t work out and you need to sell, give me a call.
You forget that the Used car dealer is a for profit business, and that cars, unlike houses, depreciate from the time they are purchased new, due to mileage, wear and tear, newer technology and models, etc…
Actually, for the astute buyer, there are definitive wholesale and retail values for every vehicle depending on the above range of conditions and a lot of people have become wealthy dealing in automobiles, just like they do in Real estate. Keep in mind that neither used cars or used houses have ANY intrinsic value, and thus are always market driven. That’s why houses in California and New York cost so much compared to what they cost here in rural Ohio.
Now as to the original question, the buyer and seller are approx $50,000.00 apart which means it’s not likely to happen. Why would you want to be the bad guy to break the news to them? Are you that desparate for a deal? I would start with my local finance Companies and banks to see if they owned any properties. They already have appraisals, are motivated and, if they choose can offer you the financing.
That’s what you are supposed to think but is it true? Could things work differently than the way you have been taught?
Is there really a law that car dealers can’t sell a car for less than they paid for it? If so why doesn’t the law apply to their customers? They never offer to give you what you paid for your trade in do they?
If you think this is so much quibbling, get this. At the present time my everyday work vehicle is a 94 Voyager minivan. A similar van, same year model and color, is being offered by a local car dealer for $6995. I paid $2500 for mine, and I bought it a year ago when prices were presumably higher.
I don’t know about you but when I started learning about money and investing I had to revise my whole line of thinking and learn to look at things in a whole new way, in many ways the opposite of the conventional wisdom or “commom sense”.
I am not trying to belabour a point but I am first and foremost a Used Car Dealer and a real estate investor second and while I understand your point, it’s flawed. The law that says a car dealer can’t sell his inventory for less than he paid is the law of economics. If he were to sell all his cars for less than he paid he would be out of business. That being said, I have sold cars for less than I paid. That was when I felt I had made a mistake. If I do that too often I will be forced to close the doors. As far as John Q Public selling a car for what he paid, What he paid has no real bearing on the worth of that vehicle. A regular person can make money buying low and selling high in the automotive industry, however it is much more difficult because of warranty issues, financing issues, reconditioning issues, tax issues, trade in issues, etc… Your example is flawed in that there are no two used vehicles exactly the same. Your 94 Voyager; is it a Grand Voyager? LE, SE, how many miles? condition? In addition, the asking price as in real estate, is moot. What will the van actually sell for? will there be a trade in involved?
Back to real estate, I just read a post where the investor valued a parcel at $20’s to 30,000.00. The seller wanted $74,000.00 an unusually bizarre situation that illustrates this point well. Who’s right? We won’t know until it sells. If someone buys it for $50,000.00 who wins?
At that point, the value of that unique piece of real estate is what it sells for or 50k.
What we strive to do is have specific knowledge of our particular market, to know before we buy anything, about what we can sell it for and how much it will cost to get the property sold.
I apologize for jumping you a little bit, it just irks me a little to see people picking on my profession in a manner that makes us look like shysters. For the most part, just like RE investors we work very hard at our chosen career path.