Purchasing a car or a home can be fun. To make things even better, here are real life considerations that, if recognized, will assure that fun is not spoiled.
WASHINGTON, July 26, 2015 − Caveat emptor! This Latin phrase for “let the buyer beware” is commonly cited in real property transactions, but it can easily apply to buying a car as well.
The expression’s effective takeaway: You must be diligent and informed when making a purchase.
Purchasing a car
Clearly, with the advent of the Internet and many ways to determine fair pricing for ourselves, we are savvier consumers today. But there are still many things we should know, particularly when a sharp salesperson is trying to close a sale.
We know enough to routinely refuse overpriced add-ons such as rust-proofing and fabric protection. But auto dealers have other tools in their kit.
Selling at a few hundred dollars or so over the “dealer invoice price” is misleading, and a purchase at that price is not a bargain. Salespeople are happy to show you the invoice to convince you that the dealership is making the most miniscule profit possible by “letting the car go” at that price. Auto-dealers still benefit significantly from this ruse, sometimes by thousands of dollars, in hidden “dealer holdbacks” and “dealer incentives” from the manufacturer that reduce the amount they pay − that “dealer invoice.”
What to do − inquire about these items before you say “Yes.” Unless you are looking on the last day of the month, statements such as “this price is only available today” are nothing more than pressure tactics. On the last day of the month, it is indeed possible that the dealership needs to make some final, quick sales to meet end-of-month bonus quotas. In such cases, the prices are truly being reduced for that day only.
What to do – Use all information you have obtained about the price to determine whether you are being offered a competitive price.
“No haggle” or “guaranteed “ pricing policies are attractive advertising lures, particularly for those who hate the negotiation process. The problem is, these prices are often higher than even the price a salesperson would initially offer.
What to do – Haggle. You will get a better price if you have the evidence that the vehicle is being sold for less at other dealerships.
“So sorry, you did not qualify for that interest rate” is another tried-and-true dealer tactic. After you think you have finished the deal, the finance person comes over and whispers something to your salesperson, or hands him or her a piece of paper. You are told your credit was not good enough to allow them to give you the interest rate on the financing that had been discussed. A higher interest rate means you pay more. Your credit may or may not qualify you for the initially agreed-upon rate, but you have no way of knowing this on the spot. Worse, when they tell you “no good,” they can make it seem as if it’s your fault that “the deal” is not going to be honored.
What to do – Have a financing offer already in place from a bank or credit union before you shop for a car. If the dealer wants to place a higher rate, turn around and use the bank offer.
Buying a used car? The salesman tells you about its great condition and offers to show you the Carfax report. Sensational. But be advised: that report may not contain everything you should know. Problems that do not result in insurance claims are often not on the Carfax report.
What to do – Get an inspection from an independent mechanic (cost probably $200 to $400) to verify the used car’s condition to your satisfaction.
Purchasing a home or real estate
House hunting? Like purchasing an auto, real estate has its own briar patch of problems to ensnare the unwary. When making your final decision on a real estate purchase, keep in mind several important concerns.
First of all, be aware that in addition to the actual sales price of a home or a real estate investment, real estate and other taxes are important to consider. There are tax credits available in many instances, particularly if you are a first-time buyer. In addition, there are several deductions you may claim (mortgage interest and real estate taxes among them) when you file.
Depending on jurisdiction, there are other taxes that will potentially cost you. Property taxes can vary significantly depending upon the value of the home and its location. In addition, while they are not technically “taxes,” there may be associated fees or assessments to be concerned about. Homeowner or condominium association fees can be high, and they may not be tax-deductible.
What to do – Find out about all fees and what the property taxes are before you buy in order to assure your piggybank has enough in it when it is time to pay.
Yes! This is a beautiful house in an idyllic setting and in a great neighborhood. But you really do not know what may lurk beneath its attractive surface. It may be laced with mold, or other equally vexing, dangerous or costly problems. There could be plumbing leaks or problems with radiators, ceilings, and roofs. Inner-walls could be concealing a serious pest infestation. Foundation problems, water heater or HVAC system problems may be invisible at the time but could eventually prove to require costly repairs or remediation.
What to do – Get a comprehensive inspection from an inspector whom you have thoroughly checked out beforehand.
Want to paint your house a different color or put up ornaments on your lawn? Great! But wait! Some properties are covered by rules set out by homeowners’ associations (HOAs) or government ordinances. HOAs can limit your freedoms. They can regulate everything from pets to landscaping to placing kid structures in your back yard. Sensible association rules that are sensibly enforced can actually add to the value of your property over time. But they may also limit your choices when it comes to a dwelling’s appearance, landscaping or renovation choices.
What to do – Inquire about and obtain a copy of the association rules and go through them before you close a purchase.
Insurance protects you in two ways. First, “title” insurance protects your ownership of the property. Wouldn’t it be a bit troubling to learn three months after you have moved in that the seller did not own the property, and now, neither do you, because the real owner never sold it? Having a title search done through the local land records is vital to assure proper ownership and title to the property. The title search process can also alert you to any liens (claims against the property) and easements (rights others have to the property) of which you may not have been made aware. Title insurance protects you against all of these possible problems.
What to do – Make sure a title company searches the land records and is prepared to issue a title insurance policy.
Next, get homeowner’s insurance, something that’s usually required by the lender. After all, you just spent a ton of money, so now insure your purchase. A good policy will cover theft, most damages that may occur, and injury liability as well.
What to do – in advance of the purchase, talk to several insurance companies and find out what they offer both in coverage and cost, and be an informed consumer. Comparison shop and make sure you get the best and most comprehensive coverage at the best price.
In some ways, the most important variable of all, however, is the affordability of your proposed home purchase. Before you buy a home, make absolutely sure you are financially ready to do so. Make sure you can afford the down payment and then the monthly mortgage payments that will remain in place for years. If you do not have a stable job or if your income fluctuates dramatically, maybe now is not the right time to purchase.
Thoroughly research the home you want to buy and compare, compare and compare. Start with neighborhoods, schools, traffic patterns, proximity to shopping and then, the home itself. In the end, this kind of research is time well spent.
As your decision to proceed draws closer, be sure to get mortgage loan estimates from several potential lenders. Use of the Internet to conduct this research can be both time-saving and educational. When you settle on a lender, get pre-qualified for a loan before you begin the purchase process, so you will know what price-level home you can realistically obtain. This will allow you to negotiate the final price from a grounded, informed position and will prevent you from agreeing to something based on emotion or “loving” any particular property.
Now, you can rest assured that when you drive your new dream car to your new dream home, you can really dream peacefully the moment your head hits the pillow.
Paul A. Samakow is an attorney licensed in Maryland and Virginia, and has been practicing since 1980. He represents injury victims and routinely battles insurance companies and big businesses that will not accept full responsibility for the harms and losses they cause. He can be reached at any time by calling 1-866-SAMAKOW (1-866-726-2569), via email, or through his website.
His new book “Who Will Pay My Auto Accident Bills?, The Most Comprehensive Nationwide Auto Accident Resolution Book, Ever” can be reviewed on http://www.completeaccidentbook.com and can be ordered there, or obtained directly on Amazon: Click here to order
Mr. Samakow’s “Don’t Text and Drive” campaign, El Textarudo, has become nationally recognized. Please visit the website http://www.textarudo.com and “like” the concept on the Facebook page http://www.facebook.com/textarudo.
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