Skip to main content

Real Estate's Healthy Engine

A friend of mine works for a major car manufacturer in his capacity as a mechanic and technician – he’s been with the same company for over 20 years, so it’s safe to say he knows a thing or two about how engines work, right?  Whenever I have a problem with my car that extends beyond needing new tires or an oil change, I always reach out to him to see if he can give me an idea of what’s going on and how much it’s going to cost to fix it. 

In the times he’s kindly come over to look at one of my ailing vehicles, I’ve learned a couple of things.  One is you don’t need nearly as many “things” to change your spark plugs as the folks at the auto parts store try to sell you.  The other little morsel of wisdom is in order for a car to start and run, it needs three things: air, spark, and fuel.  For an internal combustion engine, if you take one of these three things away, you don’t get the controlled explosion that makes the heart of your engine pump.  (Side note: this is not to be confused with Earth, Wind, and Fire – the band whose music you need as a vital part of a play list to make the heart of your party pump.)

As if you didn’t see this coming from a mile away, I’m now going to equate this to a successful real estate transaction – one that lives and breathes.  The air, spark, and fuel in a successful real estate transaction is, respectively, an agent, a buyer, and a mortgage person – if you take one of these three things away, you just have a couple of people trying to make pleasant but possibly awkward conversation. 

The agent supplies the oxygen – the vitality, if you will – with her/his knowledge, expertise, attention to detail, and zealous representation of the buyer’s best interests.  The buyer provides the spark – the excitement and drive – to acquire that first investment, a home in which to start a family, a vacation property or second home, or a home after relocation.  And the lender, of course, provides the right type of fuel and the correct amount to get everyone to that final destination.

There are specific things that each party MUST do that the other two parties can’t, of course.  In most instances, this is understood and doesn’t need to be discussed.  However, would it be a bad idea to get all three parties in one room before a property is previewed or a prequalification occurs to discuss the expectations everyone has of one another and have all three agree to live up to their parts?  If this were to occur (assuming everyone did, in fact, live up to what they promised to do), we would have smoother, shorter, and more seamless closings.  Why?  One word: accountability.  When someone is accountable (buyer included), they pay better attention.

Let’s return to our car analogy:  whether it’s a Mercedes-Benz S 560 (a luxury home) or a Fiat 500c (a one-bedroom condo), you still need air, spark, and fuel – you can’t substitute even one of those things, and each one has to do its part equally well, or all you have is a hunk of materials that no one wants to buy or own.

Comments

Post a Comment

Popular posts from this blog

Financial Nearsightedness

Years ago when the Consumer Financial Protection Bureau was created, we had some wacko thought that part of the job of the folks filling its ranks would be to . . . protect the consumer.  In some people’s view, this would mean that builders of new homes would no longer be able to dangle the carrot of “free” incentives if the buyer would finance the purchase through the builder’s in-house or preferred lender.  To those same people, it just made sense that the CFPB was created to even the playing field and make it so that the consumer got the very best deal available.  Well, we were wrong. Builders ARE allowed to offer incentives for using their in-house and preferred lenders despite the fact that sort of goes against the idea that the consumer is getting the very best deal available. And for most consumers, all they see is the incentive, and this computes to less money coming out of their pocket at closing  –  and they’re right (sort of).  The purpose of today’s article is si
Post a Comment
Read more

Topless Professionals - Nope

Fads come and go, certainly, but you can’t always tell the difference in the moment between a fad and a trend  –  because refusing to adapt to the trends can be limiting . . . if not disastrous.  Let me share a couple of examples where failing to see where things were headed didn’t turn out well.   An engineer presented the idea of a “filmless camera” to the executives at Kodak back in 1975, but they laughed him to scorn.     In 2012, Kodak was forced to file for bankruptcy because they failed to adapt to the digital world.     We all know Steve Jobs and Steve Wozniak, but how many of us recognize the name of Ron Wayne (and, no, that’s not Batman’s brother)?     Ronny was the third founding member of Apple, and he sold his 10% stake in the company in 1976 for $1500.     His shares would now be worth over $50 billion.     WAY BACK in 2000, Reed Hastings approached Blockbuster and offered to sell Netflix for $50 million.  Blockbuster turned Hastings down.  Netflix is now wor
Post a Comment
Read more

Sitting on the Fence Only Gives You Splinters

“I woke up this morning and couldn't find my socks, so I called information.   She said they were behind the couch.   She was right.”   Reading the words of comedian Stephen Wright isn’t quite the same as actually hearing them with his deadpan delivery, but they’re still funny.   The same can be said for timeless wisdom: whether you hear it coming directly from the lips of a wizened old sage or you read it in a little missive such as this, it’s still wisdom, right?   They say a picture’s worth a thousand words, so you’re about to get 2,000 words’ worth right here: I’m going to show you two graphs that are going to speak volumes about buying power and interest rates – far more than I could convey if I tried to write over 2,000 words (and probably put you to sleep).   Obviously, this first graph shows how even a slight change in interest rates can affect someone’s buying power in the real estate market.   There’s a fairly big swing between what someone can a
Post a Comment
Read more