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 kismetrei@earthlink.net. See other article by Willard at http://www.kismetgroup.com/; kismetrei@earthlink.net

In The News:


Investor's Business Daily

Apple should break its silence on Apple Watch sales data
Investor's Business Daily
Apple (NASDAQ:AAPL) iPhone sales are poised to impress again in the company's June quarter results, Deutsche Bank analyst Sherri Scribner said in a report Sunday. But Apple Watch remains a "wild card," given limited details about its initial sales from ...
Apple Inc. (AAPL) iPhone Sales Growth May Have Reached Peak: Deutsche BankBidness ETC
Apple Inc. (AAPL) iPhone Sales Have "Peaked," But This Time Is DifferentLearnBonds

all 206 news articles »

Yahoo News

Samsung forecasts profit fall as S6 sales disappoint
Yahoo News
Samsung's smartphone sales were also hit by a new law that was enforced in South Korea last year, which barred handset vendors from giving hefty subsidies to phone buyers. The measure has been a boon to Samsung's rival Apple Inc., whose iPhone sales ...
Why Samsung Galaxy S6 sales suckZDNet
Samsung Profit Misses Estimates on Galaxy S6 Phone StrugglesBloomberg

all 605 news articles »

GeekWire

Amazon is kicking off a huge Black Friday-like sales event called 'Prime Day ...
GeekWire
Next week Amazon is slashing prices on thousands of items in hopes of creating a second “Black Friday” shopping event to celebrate its 20th Anniversary. The 24-hour sale called Prime Day officially kicks off on July 15, the eve of its anniversary.
Amazon Creates Its Own Sales Holiday, "Amazon Prime Day"Fast Company
Prime Day: Amazon Wants to Beat Black Friday with Massive 20th Anniversary ...BGR
Amazon 'Prime Day' 20th Birthday: More Sales Than Black Friday -- How To Get ...The Inquisitr
CNET -Business Insider -Atlanta Journal Constitution (blog)
all 430 news articles »

Forbes

Simon Sinek Says "Start With Why" But Sales Experts Disagree
Forbes
In our world at InsideSales.com (Disclosure: I'm one of the two Founders) we sell very powerful cloud software and telephony tools with predictive analytics that allow sales professionals to understand the science of human sales behavior. But people ...


Forbes

Is Twitter Really The Favorite Social Network For Sales Professionals?
Forbes
The latest talk in the world of sales is definitely surprising: Twitter has beaten LinkedIn as the number one social platform for sales professionals. According to a new study by Kitedesk and A Sales Guy, Twitter has edged out LinkedIn—even if by a ...


Apple Insider

Apple Stores to start sales of first HomeKit-enabled thermostat on Tuesday
Apple Insider
Apple Stores to start sales of first HomeKit-enabled thermostat on Tuesday. By AppleInsider Staff Monday, July 06, 2015, 09:48 pm PT (12:48 am ET). Apple online and brick-and-mortar stores on Tuesday will start selling ecobee3, the first Internet ...

and more »

Milpitas home sales prices surpass $1.9 million
San Jose Mercury News
Home sales are compiled by CalREsource, an Oakland real estate information company. Sale prices are computed from the county transfer tax information shown on the deeds that record at close of escrow and are published four to eight weeks after such ...


New York Times

Music Publishing Deal Driven by Shift From Sales to Streaming
New York Times
In the days when publishers' income was dominated by record sales, the mechanical licenses handled by Harry Fox Agency were a lucrative business that largely financed the operations of the National Music Publishers' Association, said that group's chief ...

and more »

HeadlinePlanet.com

Meek Mill's "Dreams Worth More Than Money" Wins Sales Race with ~216K
HeadlinePlanet.com
Thanks to a dominant opening week total, Meek Mill's “Dreams Worth More Than Money” won the music industry's final Monday-Sunday album sales race. According to Hits Daily Double, Meek Mill's “Dreams” moved approximately 216,173 copies during the ...
First Week Sales Numbers For Meek Mill's "Dreams Worth More Than Money"HotNewHipHop

all 28 news articles »

June home sales spike over '14
Champaign/Urbana News-Gazette
CHAMPAIGN — June home sales in the Champaign County area were up substantially from a year earlier, according to the Champaign County Association of Realtors. The number of homes sold in June was up 13.6 percent from 2014, while dollar sales ...

Google News

Customer Service Revival

Value is in the Eye of the BeholderSales today is... Read More

Female Mannequins: An Overview

Female mannequins are very common in clothing stores. They are... Read More

Dont Call Me

The March, 2004, issue of Psychology Today reports on an... Read More

Do You Know When You Are Being Sold To?

Britney Spears has recently caused controversy with suggestions that the... Read More

How to Acquire More Leads

The most effective prospecting techniques were revealed in the August... Read More

How To Shorten The Selling Cycle And Reduce Buying Stalls

The main reason for buyer resistance and selling stalls boils... Read More

Leave a Better Voice Mail Message

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

Ten Quick Etiquette Tips for Business Lunches

Knowing what to do when meeting a prospective client forlunch,... Read More

Sales 101: Handling The Angry Customer

I am often reminded of the following true story whenever... Read More

The Risk of Being A Yes-Man

Sales is all about negotiating. You are negotiating from the... Read More

Breaking Through The Comfort Zone Barrier

After completing a workshop on personal productivity or time management,... Read More

Are You Scaring Your Customers Away?

"Hello, is (pause) puh-TREE-shuh home?"So started my weekend lesson in... Read More

When the Nose of the Camel is in the Tent

My new job was to sell Commercial Service Agreements. It... Read More

Interactive Sales Letter Skyrockets Conversions with 2 Simple Questions

There are many tactics and techniques that go into converting... Read More

Talking To A Prospect As If To A Friend

While working with a new coaching client, I asked to... Read More

Creating More Effective Proposals

The need for good proposals - the business kind, not... Read More

Solution-Sell is a Myth!

Who among us is not already up to here with... Read More

Nothing Happens Until Someone Sells Somthing

You can always tell a good salesperson, they are always... Read More

Freebies

Freebees--Freebees--FreebeesWHY PAY, WHEN "YOU CAN HAVE IT FOR FREE?"There are... Read More

Mindset Over Materials: The Secret Weapon of Sustainable Sales Success

Long-term sales success has less to do with skills or... Read More

Define Your Best Customer

To be more effective at developing relationships, one should always... Read More

Selling: an art of a skill?

Selling is as much an art as it is a... Read More

People Buy People So Sell On Relationships

(Objection handling tips excerpted from Objections! Objections! Objections!)People buy people.... Read More

Sales Copy Tips

Writing good sales copy is not an art, it is... Read More

The Problem With Technology At The Point Of Sale In Financial Services

BackgroundThere's a conundrum that currently exists between the customer and... Read More