It seems we are doomed to repeat our mistakes. Mankind has been jumping over bushels of hundred dollar bills to reach the quarter in the corner since the dawn of currency. I have a number of new stories every week of consumers who look very hard for the best deal.
But they overlook the fact that they may be dealing with a disreputable provider. Or they may not get what they expect. Many times low cost service providers make promises that won’t be kept. Even worse, shoppers may be getting a price quote from someone that has no idea what they are doing. But boy do we consumers love a deal. We love to believe what we are promised.
A real client story
I had a client call a few months ago and they wanted to refinance their condo. They started the conversation by grilling me on price. I responded that I needed to know a lot of things before I could quote a price. I explained I needed things like credit score, appraised value, debt ratios, etc. There are numerous variables that go into pricing a loan. All they wanted to hear is what my most aggressive price was. Somehow I could not get them to slow down and hear my logic. After asking about some of the characteristics of the loan, since it was a condo, I tried to get more data.
I tried to get answers to important questions that all lenders would need the answers to, like:
how many units are owned by investors versus primary residents?
how many unit owners are delinquent on dues?
does one unit owner own more than 10% of the units?
does the condo have 10% of the annual budget set aside in a reserve account?
He did not want to review these questions, he just wanted to talk price
“I need the best price you can quote me.” Then, he wanted to know if rates went down after he locked in a rate if he could get a better deal! And also wanted to know if we’d pay the appraisal fee! Obviously this was going nowhere, and I ended the conversation. I could not provide an accurate price quote without all the details. And I think if the conversation went much further he would have been asking me if I would commit to coming to his condo once a week to clean his kitchen, mop the floors, and scrub the toilets. He wanted the sun, the moon, and more. This was a very unreasonable individual.
Then, about a month later, I saw in an email my two favorite words”
The rest of the email, from the same client I could not get answers from, went like this:
“I wanted to refinance with you a month ago, but you weren’t able to quote me a low rate, and I went elsewhere. Unfortunately, my loan app fell through at the last minute with the lender I went with. They had problems with the 11.9% of the units in the development still held by the developer. Anyway, would you accept my applications now?”
Yes, it was music to my ears. But, no, it did not make me happy. I was upset that yet another client went racing ahead to what he was sure was the “best deal” without getting all the answers he needed in advance. He jumped over a bushel of $100 bills to get the quarter in the corner. Meaning he went after an alleged better deal, that could not even be done, it turns out.
Had he slowed down and let me ask all the questions I wanted to I may have had good news for him. There is one possibility, in this scenario, to get a loan through where one unit owner owns more than 10% of the units in the building.
In desperation to secure the lowest rate by 1/8% in rate, the last $100 in closing costs reduction, and the last word in getting the best deal; we consumers tend to overlook:
- realistic goals
- and experience
I wish I could do something besides blog occasionally to remind people that they are only putting themselves in a bad position when they go for the rock bottom deal. Sometimes, those deals are never delivered anyway. Please be careful, ask a lot of questions, and think about other characteristics of your service providers besides price. You’ll thank me.