HOW TO AVOID OVERPAYING FOR A HOME.........

Better still follow these 9 techniques and save, Save, SAVE!

As a 4 time home owner I can tell you there are two basic reasons some home owners overpay.

1.      They develop an emotional attachment to the prospective property.  

    

2.     They fail to do their homework.

    

   Let’s take a closer look at #1.  Any good real estate agent wants the client to fall in love with the house they are showing.  They point out all of the positives, such as large closets, new carpeting, recent remodeling projects, water softener, new hot water heater, easy access to schools and shopping, etc.  Think about your dealings with an agent and you’ll remember all of what I just said.  

    

   The next step is to ‘gloss over’ or simply ignore any negatives.  They will never mention the graveyard that boarders your backyard, the murder that happened in the home, basement flooding, the previous fire, the old water heater, the furnace that was installed in 1921, the leaking roof, the total lack of insulation, the neighbors all hate each other and don’t get along, etc.  Again, if you’ve ever owned a home, I’m sure you remember a few negative shockers that you found after you sealed the deal.

    

   How to avoid the above:  

   
   
   1. Never fall in love with an inanimate object.  And be weary of forming an emotional attachment with animate objects.  The very second you or your significant other says, “I love this house”, you lose.  That’s exactly what the real estate agent wants to hear.  Never say it and better still never think it. 
                  
      The agent selling the home wants to form an emotional bond with you and that’s why I added be weary of forming an emotional attachment with animate objects.    
      No bonding with the agent.  Your primary function in this transaction is to get the absolute best
      deal.  The agent is a sales person trying to separate you from your money.      
      That is the long and short of it.
      
      
      2)      Know what you absolutely must have in your new home.  Make a list.  Things like an attached garage, fireplace, 3 bedrooms, 2 baths, large kitchen, family room, etc.  Don’t waste your time and emotions looking at homes that don’t make the cut of the list you make.  Don’t waste your time with an agent that tries to get you to see a home that doesn’t meet your criteria.  If the agent says, “Oh, you must look at this house.  You’ll love it.  Yes, I know it doesn’t have 2 baths, but really take a look.”  Say goodbye to both the home and that agent.  Oh, make sure you tell the agent upfront that you don’t want to spend time looking at any home that doesn’t match your needs. 
      
      
      3)      Never, Never, Never negotiate on price.  Know what you are willing to pay and not a penny more.  Not one penny and let the agent know you DO NOT negotiate price.  Tell the agent to let the seller know this too.  You will make 1 offer and 1 offer only.  Take it or leave it.  In a soft real estate market there is never a need to play the price game.  (Side note – some of these tactics can be used when buying a new car.)  The way to avoid the price negotiation game is simple.  Ask for the moon with a list of things that you want to remain with the home.  Ask for it especially if you don’t care if you get it.  Ask for things like all appliances, the curtains, that clock in the hall, install a new garage door opener, the patio furniture, put in a new furnace and/or water heater.  These are called throw-aways.  If you get them, great.  But since you will not negotiate on the price, you can remove these from the deal.  Let’s say you get the appliances and you really don’t want them.  Simple – sell ‘em and you keep the money. 
      
      
      4)      Walk away.  Never be afraid to do this.  When it comes to the most expensive purchase you will make in your lifetime, it’s your way – all the way.  If you found this home there will be several others out there that will meet your expectations.  Again, this is especially true in a soft real estate market that is top heavy in foreclosures.  (The walk away technique is a ‘must use’ when buying a car.)
      
      
      5)      Shop your loan.  Check all of your resources so you get the absolute best interest rate.  Fixed rate only and no adjustable rate mortgage (ARM).  It’s not a question of “If inflation kicks in” but “when”.  It you have an ARM you will get hurt.  Put as much money down as you can and go for the shortest length of mortgage you can afford.  The shorter the mortgage the less you will end up paying in interest. 
      
      
      6)      Be pre-approved for your loan.  Know the maximum amount you want and get pre-approved for as much as you can afford.  Remember you don’t have to borrow that amount if you come in under what you expected, but you will have it available if you need it.  Here’s the big plus in pre-approval – when you say you don’t negotiate on price and you are pre-approved for the loan the agent knows the sale will go through.  Be sure the agent tells the perspective seller and make sure he/she understands when (not if) they agree to your offer the sale of the home is virtually a done deal.
      
      
      7)      This may sound a bit sick or twisted, but find a motivated seller.  By this I mean someone that has to move for their job, because of a divorce, an estate sale, foreclosure, etc.  Ask the agent why this person is selling the home.  If he seller is truly motivated it makes it easier for you to win.
      
      
      8)      Meet the neighbors.  Knock on doors and talk with others before you commit.  The more you talk with the better.  If you get a bad gut feeling see #4.
      
      
      9)      Know and keep in mind this game is being played with YOUR MONEY.  The more you keep the better off you will be in the end.
      
      
      Finally -  © Krystalco LLC 2013  Any publication or reuse of the information on 
                   this blog,   in part or whole, without express written consent is
                   prohibited.
      
      

FEE FRENZY

Paying More For The Same Or Less With FEES

or 

Don’t Hate The Airlines For FEES Because Utilities Did It To Us First

 

I remember a time when our phone bill came and it was very simple.  The same basic bill structure was applied to the electric bill, water and sewage, and natural gas.  Back then we didn’t have cable television.  We only had three or four local channels and they were, get this, FREE.  At that time there were some decent programs worth watching, compared to today’s 500 pay channels of mostly overpriced garbage. 

Let’s take a closer look at how things used to be.  Back in the ‘50s and ‘60s a phone bill had a basic service charge, a phone rental charge (You were not allowed to own your own phone at that time.  You were forced into renting one from your service provider.), a monthly fee for having an ‘unlisted’ number (If you wanted it.), and toll calls.  That was the entire bill.   

It looked something like this:

Basic service (4 party line)    $3.00

Phone rental                          $1.00

Non-published number          $ .50

Toll Calls                               $2.00

Total Due                              $6.50

 

Of course, the toll call amount was broken down by each call and would vary month to month but you get the idea.

Here’s how an old fashioned electric bill would read:

Electric Basic Service                            $4.00

600 Kw @ $.01                                      $6.00

Total                                                       $10.00

The gas bills of days gone by mirrored the electric bill, only gas was measured in cubic feet or cubic yards.  All bills back then were very simple.  They didn’t need legalistic disclaimers and threats.  They only had about 3 or at the most 4 lines of charges, a total, and you paid it.  BOOM.  The end.

Now here’s a breakdown of my actual electric bill from last month.  If you are anything short of a master’s degree and knowing acronyms, you’ll have trouble figuring this out.  Most of what you what you will read below is the result of bureaucracy craziness.

                                                              923.00 KWH x .0500500      46.22

                                                               30.00 KWH   x .3292000       9.88

                                                                119.00 KWH x .0714500      8.50

Deferred Energy Adjustment              1072.00 KWH x 0052000CR    5.58 CR

Temp Green Power Financing (TRED)   1072 KWH x .0007100          .76

Renewable Energy Program    (REPR)   1072 KWH x .0018000        1.92

Energy Efficiency (EE) Charge               1072 KWH x.0033600           3.60

Basic Service Charge                                                                          11.30

Local Government Fee  5%                                                                  3.83

Universal Energy Charge                       1072 KWH x .0003900            .42

Total Electric Service Amount                                                             80.85

My water bill has 7 line items, including these gems – SNWA Commodity charge of 1.12, SNWA Infrastructure 4.83, and add to that an SNWA Reliability Surcharge of a nickel.

My gas bill, with 6 line items, has a Universal Energy Charge, Delivery Charge, and a REP Rate.

My phone bill has 12 lines of fees, of which 4 are listed as taxes.  I also have the honor of paying a Nevada State Telecommunications Relay Service Surcharge, a Nevada Universal Service Fund Surcharge, and a Universal Service Fund Surcharge.  

Admittedly, I don’t know what most of that crap means, but I DO KNOW what it is.  These are simply backdoor ways of raising taxes and revenue without the open ended appearance of raising rates. 

I know one of them is a fee to help poor people pay their bill.  REALLY?  Then, after that built-in fee that I never agreed to, the utility company has the gonads to ask me if I want to pay extra to help the less fortunate.  That’s a ball buster.  It’s already added in as a fee and then they ask me to volunteer to give more.  

SO NOW NEARLY EVERY BUSINESS IS ON THE FEE BANDWAGON

I noticed today on the side of a cab, in addition to the standard rate, there is a $2 fee for a trip to the airport and a $3 charge is added if you use plastic to pay.

Coming soon to a bank near you a fee for add on fees.

The airlines got fee crazy late in the game so they are just making up for lost time.  More leg room costs you more, checked bags are gonna cost you, food and beverage are extras, headphones – pony up some extra jing, and on and on ad nauseum.  At least on the plane vomit bags and toilets are still free.   

Whoops, me thinks I just gave ‘em an idea for 2 new fees.

© Krystalco LLC 2013  Any publication or reuse of the information on this blog, in part or whole, without express written consent is prohibited.