Everyone has had a bad sales experience in their life. We either bought something we didn't need, were sold something that was not what it appeared, or the service for what we wanted was excruciating. I am certain there are other bad experiences as well but for sake of time let's just look at those. When you are buying a widget this type of experience is very easy to forget. Not only because it was forgettable but because it does not make you feel like you made a big mistake.
I find that in Real Estate when a consumer has a bad experience it tends to haunt them forever. They never tend to have the trust that they once had in a professional. They also tend to lose the trust in their own judgment and feel that every agent or loan officer was like the last. There are people in every industry that are bad at their jobs. One can only speculate as to why. I bet that could be a good blog discussion. Back to the experience. A bad experience tends to make a consumenr tentative. They also tend to get so many opinions involved in the next decision that it leads to indecision.
Indecision based on an experience of the past is where the haunting takes place. Opportunity waits for noone. You may ask where the heck is Matt going with this. Well here it is: I have a client that I did a loan for in 2003. At the time I put him in a loan that was right at the time. He had a great rate, got the money he needed and was set for the next five years. As is the case many times the consumer decided that he needed to get a little money out of the house. He did this because he received one of those flyers in the mail that said get money and have this kind of payment and this kind of rate.
First, he should have called me but he didn't. For whatever reason, he was sold from the first call and could not otherwise be convinced. He was taken. He was put in a Neg-Am with a three year prepay tied to the stinking LIBOR! It was only three months after that I received a call and the call was like this: "Hi Matt. I think that I made a huge mistake. I got myself into this loan and now I have to pay $9,000 to get out of it. Can you help?" I asked of course if you needed a loan you should have called but I understand why you didn't. I have not done my job in keeping up with you, I am glad you called. Let me see what we can do.
We got him approved for a loan and in the end we decided together to wait a while and see what rates would do. As we had predicted rates came down and he called me back. When he called back he said Matt I got a call from this guy and he said that I can get 4.75% on a 30 year fixed. I said, maybe for four points. He said 3.75% in fees. WOW! At this point I said I will help you but I need you to give me a committment. Commonly you seek a lot of opinions because you are searching for the magical rate. I said that price is what you pay value is what you get. Have you ever felt mislead by me. The response was NO, you have always done right by me. WHY, WHY, WHY then does he seek another brokers advice. So long story short we lock and approve a great rate. We talk about all the pros and cons of every option and decide on one. Four days later the call. My accountant and step-dad think I should wait. They think that I should stay in the adjusatble that is as volatile as an inmate on death row and risk not taking advantage of rates that are ridiculously low.
Price is what you pay and value is what you get. The advice that he is taking is simply because he no longer values his own thoughts. He is scared and scarred from the bad experience that will haunt him in the future. Where will the advice givers be when the payment goes up or in three years when he refinances to a rate 2% higher than our locked rate. There is only one way rates can go from the bottom. I do not have a crystal ball and he may get lucky. A chance that I would not take. Indecision will be costly if not only in lack of sleep. I would be willing to bet that he will refinance and pay the prepay before the time is up because his payment goes up.
In the end, the bad experience that he should have never had will haunt him forever for two reasons: 1) He is not forgiving himself for the purchase 2) He trust noone and seeks the advice of everyone. He should refinance now and get out of the bad marriage before it gets worse. Cut the ties and move on to fresh beginnings it was a learning experience. Again, if it were a flobee or power putty for $29.00 he would have forgotten it long ago.
Comments(2)