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:


KSAT San Antonio

Can Tax Free Weekends Revive Retail Sales?
Forbes
Retailers are facing a challenge this year. After a doldrum six month sales period they are now entering the important back to school sales season. Will customers continue to be apathetic and postpone purchases? Or will the tone be different? Primary ...
You're Giving Away Money By Shopping Before This WeekendTIME
N.C. sales tax holiday a thing of the pastCharlotte Observer
Texas sales tax holiday set for early AugustKSAT San Antonio
WFLA -Arkansas News
all 85 news articles »

Business Insider

Pending Sales of U.S. Existing Homes Unexpectedly Decrease
Bloomberg
Fewer Americans than forecast signed contracts to buy previously owned homes in June, a sign residential real estate is struggling to strengthen. The index of pending home sales declined 1.1 percent from the month before after rising 6 percent in May, ...
Pending Home Sales Slip in JuneWall Street Journal
Pending home sales dropped in JuneFortune
Despite increased buyer demand, home sales flat Home sales in East ...Knoxville News Sentinel
MarketWatch -Business Insider -Nashville Business Journal (blog)
all 165 news articles »

Forbes

How to Stop Hating Your Oracle Sales Rep
Forbes
Having worked much of my career in IT, both as a buyer and builder of products, I can tell you for certain that Oracle sales reps often get a extra large load of hate from their customers. Part of this is the natural tension between the mission of ...


Forbes

StubHub Increases Sales By Playing To A Simple Game Of Psychology With "All ...
Forbes
When it comes to marketing and sales, the best of the best play to what will ultimately make the consumer happy. If you think about that long enough, likely the first thing you want to believe with any purchase is that you got a good deal. Companies ...


Dunkin' Brands Q2 Earnings: Increased Competition Drags Down Comparable ...
Forbes
Dunkin' Brands delivered disappointing results in its Q2 earnings report, as comparable store sales of the Dunkin' Donuts U.S. segment increased just 1.8%. The company was expecting the comparable sales to bounce back to the range of 3%-4%, as the ...

and more »

GrafTech sales and profits down for the second quarter
The Plain Dealer
Net sales for Engineered Solutions increased 11 percent to $78 million in the second quarter compared to $70 million in the second quarter of 2013. The increase in revenue was primarily driven by new product sales of high temperature furnace systems ...

and more »

Nissan Profit Rises on Strong Sales, Cheap Yen
ABC News
Yokohama-based Nissan kept its full year forecasts unchanged at a 405 billion yen ($4 billion) net income and 10.79 trillion yen ($106 billion) sales. The profit figure would represent a 4 percent increase from the previous year and the sales figure a ...


Salon

Comcast Confessions: when every call is a sales call
The Verge
These employees told us the same stories over and over again: customer service has been replaced by an obsession with sales, technicians are understaffed and tech support is poorly trained, and the massive company is hobbled by internal fragmentation.
Comcast's sales push: The “painful” customer service call was just the tip of ...Salon

all 4 news articles »

Entrepreneur

What Angry Birds Can Teach Old Sales Pros About New Sales Tricks
Entrepreneur
Wizened (I didn't say old) sales reps can be a little stubborn when it comes to using technology and the Web to grow sales and customer relationships. Sound familiar? The problem is, you'll get left behind if you can't adapt to today's digital, social ...

and more »

Tennessee Sales Tax Holiday runs Friday-Sunday
The Daily News Journal
Next weekend bargain hunters across the state can take advantage of the state's Sales Tax Holiday from 12:01 a.m. Friday and until 11:59 p.m. Sunday, Aug. 3. Over the three-day weekend, Tennessee shoppers can save nearly 10 percent on clothing, school ...

and more »
Google News

Stop Screwing Up Your Sales Letter

"Sales Letter"... that's your web site's sales page. The page... Read More

How To Bully Your Prospects Into Buying Your Product or Service

Selling is a tough job, and sometimes you may need... Read More

Two Mistakes That Will Cost You Money

You've met a new prospect, accurately assessed their needs and... Read More

5 Ideas for Writing Effective Sales Letters

Sales letters, sent via e-mail or snail mail, are an... Read More

Follow the Long Yellow Copy: Do Long Scrolling Sales Letters Work?

Have you ever sat through a movie and got to... Read More

How To Take The Right Steps To Increase Your Selling Results

Steps - it is unrealistic for most salespeople to expect... Read More

Stop Telemarketers, Do Not Call List or Not

American consumers have spoken and have done so loudly registering... Read More

In Sales Service Means Business

Some businesses flourish while others slowly fade away. There's usually... Read More

The Art Of Cold Calling

I know, don't groan. You have to do them if... Read More

Schedule Telemarketing Time For More Success

Telephone canvassing, or cold calling, is the practice of sitting... Read More

Build & Protect Your Confidence

I can remember the first time that I had to... Read More

How Many Ways Do You Have To Justify Your Price?

If you were selling a mansion, and you were selling... Read More

Grow Your Business By Increasing the Value of Each Sale - 29 Ideas to Spur Your Brain

There are 3 ways to grow any business:- Get more... Read More

How to Revive a Dead Lead

It's easy to spend days, weeks, or months speaking with... Read More

Hate Follow-Up Phone Calls To Hot Prospects Who Won?t Call You Back? Stop Calling!

We all learned in Sales 101 we must follow up... Read More

Create a Magic Connection with Clients, Leads, and Business Associates Part II

Part I of this article explored how strategies of Neuro-Linguistic... Read More

Sell With KISS, As In Keep It Simple, Stupid

One of the most useful and fundamental communications lessons that... Read More

How to Eliminate Objections to Price

Have you ever stepped your way through the sales process... Read More

The Answers (1 - 5) Are Here !!! - Challenge Yourself - Evaluate Your Selling Skills

"THE ANSWERS (1 - 5) ARE HERE!!!"Question 1) List the... Read More

How Can Fundraising Consulting Help Us Raise Money?

If you need to hold a fundraiser and don't know... Read More

?The Power Of Consumer Opinion, & How To Profit From It!?

Selling is just a whole lot easier when you know... Read More

My Competitor Has a Better Product

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

Web Promotion: 10 Amazing Web Promotion Ways To Jump Start Your Sales

Hello, do you have a website and sell something on... Read More

Asking The Right Questions

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

Ten Quick Etiquette Tips for Business Lunches

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