Money Does Talk!

When buying something, you can buy in one of two markets. The first is buying on terms in the retail market and the second is buying in the wholesale cash market. This can be illustrated by referring to the biggest purchase we all make in our lifetime - Real Estate.

In recent years, when you are buying a house it is easy to get financing of the first mortgage, so the seller is not forced to finance the whole sale. What I mean is the seller doesn't become your first mortgage holder, the bank lends the money and the seller get the cash. Moreover, he will most likely make some concessions if he doesn't have to carry back a second trust deed.

Therefore giving the seller all cash, will usually get you a better deal than asking the seller to let you buy the house with a very low down payment, with him carrying back a sizable trust deed. The big savings come when you are buying real estate that doesn't have easy institutional financing available. The purchase of vacant land can be the best example.

My father was interested in buying industrial lots in the city of Montebello, just east of downtown Los Angeles. This was during the 1960's. In those days it was common for a buyer to put down 20% and the seller to finance the remaining 80% for 10 years at 8% interest. For example: a $10,000 lot would cost you $2,000 down with $97.06 payments every month. After 10 years the total of the principal and interest payments would be $13,647.45. If you wanted to build on the property you had to pay off the land loan, first. The sellers then would not have to wait the whole 10 years before getting all their money.

Many property owners sold their property because they wanted money and getting the $2,000 wasn't much money to them. So, my father would offer $5,000 all cash to the sellers. More than 1 out of 5 would take the cash up front instead of waiting for payments over 10 years. By offering the extra $3,000 cash down, my father saved $8,647.45 on the sale ($5,000 on the price reduction, plus the interest on the note). Now that is buying wholesale!!

Buying cars can be done the same way. When you pay retail, the dealer talks monthly payments. If he lowers the price, he'll raise the interest rate. When you are buying for cash, he can only talk price. When you are leasing an automobile, they don't even tell you the price!

The major consideration in leasing a car or not, is made by the leasing company to be all about what the monthly payment is going to be and how much extra it is going to cost you when you drive over 12,000 miles per year. Ever financed a used car from a "no credit check" dealer? He gets you for 36% interest on the balance you borrow, after getting a 50% down payment from you. Then if you miss a payment he takes the car and sues you for the difference. Buy what you can afford in cash and save making the lenders rich.

I read a report once that said that the average man makes $1,500,000 over his lifetime. Of that amount, he uses $600,000 to pay the interest on his purchases. Let's look at the purchase of a home, from a slightly different point of view. A man who makes $1,500,000 in a lifetime will be earning on average about $30,000 a year or $2,500 per month.

He can afford to spend 40% of his income on rent or a mortgage payment. This means that he can afford a $150,000 house. If he can qualify for a 90% loan he would owe $135,000 at 8% amortized over 30 years. That means he pays $221,609.58 interest plus the $150,000 principal to buy this one house and pay it off over 30 years. The interest alone is almost 15% of his lifetime earnings! Buying anything on credit can cost you more than the retail price because you must add the interest to the cost of the item.

My suggestion. Buy for cash and negotiate for the best price you can get. If you must borrow, pay it off in as short a time possible. Also, never borrow for personal consumption. Postpone the purchase long enough to pay cash. If you can't afford to wait until you save the money, you shouldn't buy the item. It is just too expensive. To buy on payments raises the cost even higher than the cash price, so it becomes even more expensive. So if you cannot afford the cash price, you definitely cannot afford the financed price. My suggestion is to pay cash and buy wholesale. BUY THE BEST, PAY CASH

About The Author

Willard Michlin is an Investor, Business Broker, California Real Estate Broker, Accountant, Financial Distress Consultant, Well known Public speaker and Administrative/Business Consultant. He can be contacted at his Ventura, California office by calling 805-529-9854 or by e-mail at [email protected] See other article by Willard at http://www.kismetgroup.com/; [email protected]

In The News:

Home sales rebound in June  KitchenerToday.com

Persuading Learners to Buy: 7 Groups

There are seven major reasons why adults continue their pursuit... Read More

Leave a Better Voice Mail Message

Yesterday I received a call from a financial planner named... Read More

Voice Mail That Sells

As a business owner, I receive my share of sales... Read More

To Buy or Not to Buy? Motivating Your Customers to Take Action!

All customers have a choice to make. Sometimes that choice... Read More

How To Write A Riveting Sales Letter That Closes Sales

How do you get people's attention and build their interest... Read More

8 Part Strategy For Constructing Your Advertising Message

Strategies to help produce your brochure, advertisment or direct mail.... Read More

My Competitor Has a Better Product

The topic of this issue's article is a response to... Read More

Is Sales Profession an Oxymoron?

If you are in Sales, you have probably heard these... Read More

How to Leverage Your Influence

Why do we get into sales? Typically it is two... Read More

The Benefits of Buying Used Store Fixtures

The difference between antique or vintage store fixtures and used... Read More

Generating Sales Leads

Any company that relies on selling a product or service... Read More

5 Ways to Encourage Impulse Purchases

I just bought six square pieces of spongy fabric for... Read More

Top 10 Ways to Maximize Your Approachability

After reading and researching thousands of books, articles and other... Read More

Asking The Right Questions

On an introductory call, how do you gather all of... Read More

Doomed Before You Dial?

Several weeks ago, I conducted a "Mastering the Cold Call"... Read More

Letting Them Use Plastic

Obtaining merchant status will help to increase your sales. Consumers... Read More

Selling Skills - How to Handle the Dreaded Question Whats The Price?

I've written previously about how to attract customers and how... Read More

Going Global: Communication Across Mental Boundaries

A completed communication consists of a sender and a receiver.... Read More

How to Reach Purchasing Agents of Big Corporations

Now business owners and sales professionals can develop a Faster... Read More

I Don?t Want To Be Sold; I Want To Buy

I went shopping for clothes today.My plan was to buy... Read More

Can You Use Hynotic Like Statements To Sell More Products?

As I become more successful with my internet business I... Read More

Sell YOU With Your Small Talk (Yes You Can)

Want to build a relationship -- sell yourself for a... Read More

Long Sales Letters vs. Short Sales Letters

Everywhere I turn, I'm being asked to weigh in on... Read More

Open Your Introduction With A Firecracker Moment

The number one requirement, whether you are a business owner... Read More

Your Profit is in Your Follow-up: A System for Increased Sales Conversion

No matter what you sell--products, services, or causes--one of the... Read More