Does That Make Sense?

I have long, involved conversations with people who are buying a home.   After all, buying a home is a huge financial commitment and the difference between various choices can be significant. This puts a premium on making smart decisions.     

The other issue is that home buying is unfamiliar territory to most people, even if they have done it before.   Practices, procedures, and terminology which are well know to real estate professionals but which are baffling to those who are not part of the industry.   Add getting a mortgage into the equation and it, literally, can be overwhelming to many people.

It is my experience that when people get into these kind of situations, they become unusually susceptible to sales pitches, their defenses are lowered.   I have heard, and have had repeated to me, statements which sound believable but which, if you really know what’s going on, are preposterous.   More specifically, they are designed to capture clients by telling them things that are not really going happen the way they are suggested or which are not supported by the facts.

There are some real estate people who seem not to be able to talk with a client without launching into a sales presentation.   They get so used to using superlatives that they simply can’t just have a give-and-take conversation about the facts of a particular neighborhood or home.   For example, every house isn’t the cutest one in town, not every house is a terrific buy.   Half are cuter than average and have of them are better buys than the other half.   I think that these people are so intent on making a sale that they overlook their primary mission: listening to what the client wants and helping them get it.

Obviously, when selecting an agent with whom to work, you want to avoid this kind of agent because you will never get a straight answer. Even if you think that you’re working with the right person, it is important when you are alone, after a day of looking at homes, you review what has transpired and summarize the key points of the day.   Then ask yourself this simple question about each point, “Does that make sense?”

It is probably worse in the mortgage business.   I have done business with 3,000 people in my career and most of them have also talked with other lenders.   When they become my clients they usually tell me tales about their shopping experience. I can tell you that I have heard tales that just make you laugh when you know the facts.  

At their heart these tales have one thing in common:   they made something sound a lot better than it really is. Sometimes it is a failure to mention all the facts, just telling the favorable ones. One of the most common is to state the starting rate on a loan – say 1.95% - and make it sound as if that is the real interest.   The truth is that the interest rate is probably 4.5% and that any unpaid interest will be added to the principal, a negative-amortization loan, a very common one.   There are millions of people who have these loans who really thought that they were getting a 1.95% loan when all the dummies up the street were paying 4.5%. They failed to ask, “Does that make sense?”

How about this common one:   “You are entitled to a special deal because . . . . .”   If you had ten friends call, they’d all hear the same thing, meaning it wasn’t special after all.   Frankly, lenders just don’t have programs where one person gets a better deal than another person with similar characteristics.

Aside from the normal emotions associated with finding the right home and financing it, this is a very rational business.   So as you go through the process, keep asking yourself, “Does that make sense?”

Good luck!