Tag Archives: agoraphobia

How to Save 35% on the Total Cost of Your Home

Stand back, all my darling practical piggies, because I'm going to do math for you again and it's going to be fabulous.

Today's delicious math is performed with the end goal of explaining why you really do need to shop around for your mortgage, and why you need to do so before you start shopping for a home with a Realtor.

See, if you're buying a home and I'm representing you, my job is to negotiate the lowest possible price. We Realtors do pretty well at the whole negotiation thing. According to MRED's MLS, the final sale prices of homes in Chicago over the past year have been about 10% less than their final list prices. 10% is nice. I got 25% off for one of my buyers this year and felt pretty darned pleased with myself for doing so, but it was a special & extreme circumstance.

But the true cost of a home isn't just the purchase price. What about the closing costs and interest payments that you'll rack up over the life of your loan? Unless you're paying cash only, you're going to be paying out quite a bit more for the privilege of borrowing someone else's money. I do everything I can to get you the lowest purchase price, but how much you actually pay? That's up to you.

By planning ahead, saving a good down payment and working the details of your mortgage you could save 9% on the total money spent after just 5 years in your home. By year 10 that savings is up to 21%. If you stayed in the home for the full life of the loan you would save 35%. That's more than you'd save in any sort of negotiations over the actual purchase price, and definitely more than the piddly 2.5 to 3% you'd purportedly save on just the purchase price by going without an agent at all. (more…)

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Confronting our Agoraphobia, Part IV: The Active Shopper’s Guidebook

(This is the fourth and final part of a series that started with Part I: Carefully Taught, Part II: The Bad Guys are Winning, and Part III: The Long Road Back.)

Let's Get Ready to Rumble! (Or at least have a polite chat.)

If you've been following the Agoraphobia series you may be ready to start shopping actively. However, if you're the average American shopper you're going to be pushing back against a lot of training and momentum trying to convince you that negotiation is difficult, scary, futile, or a waste of time.

It isn't.

Negotiation is, at worst, a conversation with a stranger. But the American consumer has been treated for 150 years like a submissive partner in an abusive relationship. As is the case in many of these situations, learning to speak up for yourself can be difficult at first. So let's assemble a guidebook to help you get started.

Level One Negotiation - learning to talk & think for yourself:

For level one, level two, and level three we're talking only about goods, not services. This is about items that you can take home from the store with you.
From this point forward, every time you go to the store you will ask the clerks about the products you are purchasing. It doesn't have to be about price. It can be about quality, color, country of origin... just get used to having the conversation. Get to know them. Be friendly and polite.
Never enter a shop without a shopping list. Never purchase anything that isn't on the list. Never make the list less than 30 minutes before you enter the store.
I've got about 7 local grocers so I can go a bit overboard on this. I cap myself at 3 stores max when comparing grocery circulars.

If you must pick something up that isn't on your list, shop slowly. Carry it around with you in the store for at least half an hour before making the purchase.
Choose your favorite direct-to-vendor shopping site - Ebay, Etsy, or Craigslist. Find something you've been meaning to buy anyhow. Choose a handful of sellers and send them each some questions about the product you intend to purchase before you buy it.
Go to the farmer's market closest to you and have a chat with the vendors. Ask at least 3 questions of a vendor before you buy something. And please, do buy something.
Pick up grocery circulars from the 3 closest shops. Figure out the least expensive combination of goods, and then compare with how much you'd pay by purchasing everything in your usual store. You don't have to actually do the shopping in split locations. Just do the math. We're practicing here. (PS, if you're in Chicago and only shop at national chain grocers I am sad for you. Check out Tony's, Food4less, Cermak Market, Harvestime, Morse Fresh Market, Mayfair Market Place, Butera and Stanley's for some great alternatives.)

Once you've been at level one for at least 3 months, you're ready to move on to level two.

(more…)

More Articles About: agoraphobia, bargaining, first-time buyers, haggling, lists, negotiation, profit margins, responsibility, saving money

Confronting our Agoraphobia, Part III: The Long Road Back

(This is part 3 of a series that started with Confronting Agoraphobia, Part I: Carefully Taught and Confronting our Agoraphobia Part II: The Bad Guys are Winning.)

Where We've Been

Over the past two entries in this series we've reviewed how bargaining has gone from common to rare, and how shopping in America has become a passive experience. We've discussed how the evolution of marketing and discounting have consolidated the power of pricing entirely in the hands of the manufacturers. We've discussed the potential gain from choosing to haggle - a peak negotiator saved $2500 in a year. That means an average negotiator could save about $1500. What we haven't discussed is how to work our way back to an even distribution of power.

Let me expand on that number a bit. $1500 saved per person, per year. 206 million adults in the United States, give or take a hundred thousand or so.^[1]Wolfram alpha: What is the adult population of North America, July 2012. Roughly 10% of them are incarcerated.^[2]NY Times: Adam Liptak, "1 in 100 U.S. Adults Behind Bars, New Study Says," Feb 2008. If the rest of them saved $1500 per year, that would total $278.2 Billion saved. Annually. (That's about 2x the annual revenue of Wal-Mart as reported to the NYSE,^[3]Ycharts: Wal-Mart Stores Revenue (WMT) as of July, 2012 or, sadly, just 1.7% of the national debt at this moment.^[4]US National Debt Clock, July 2012)

Let's have one more quote to get things moving forward:

"A recent Consumer Reports survey showed only 28 percent of Americans haggle over prices. A separate report from market research firm BIGresearch found 45.1 percent of adults haggle for things other than cars and homes.

However, the Consumer Reports survey found that consumers who haggle succeed as often as 83 percent of the time in landing a better bargain."

-- Yuki Noguchi, "Haggling picks up steam during recession," NPR.org, August 2009.

(more…)

References[+]

References
↑1	Wolfram alpha: What is the adult population of North America, July 2012.
↑2	NY Times: Adam Liptak, "1 in 100 U.S. Adults Behind Bars, New Study Says," Feb 2008.
↑3	Ycharts: Wal-Mart Stores Revenue (WMT) as of July, 2012
↑4	US National Debt Clock, July 2012

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Confronting our Agoraphobia, Part II: the Bad Guys are Winning

This is part II of a series that started with Confronting Agoraphobia, Part I: Carefully Taught.

Rollback Further

My folks have a good friend - we'll call him Doug - who's learned a thing or two about saving money. A wunderkind who made an early fortune in the evolution of microloans, he knows that small amounts add up. He's also learned that to most businesses any sale is better than no sale. Doug haggles for everything. He will walk to the counter at Wal-mart with a $25 pack of t-shirts, toss it on the belt, and tell the clerk "I'll give you $15." He renovates kitchens for a living. He will go to furniture stores and open with a bid at 50% of list price.

You'd be amazed at how often he gets the discounts he requests.

Did you think you couldn't haggle at Wal-mart? Have you ever tried? If you haven't, you're probably not alone, and you aren't entirely to blame. It sounds like a fairy tale because you've been on the receiving end of a lengthy, multifaceted agenda to make you think bargaining is scary, difficult, time consuming and futile. Let's take a look at how outside forces, both intentionally and accidentally, have contributed to the decline of negotiation in commerce. (more…)

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Confronting our Agoraphobia, Part I: Carefully Taught

Fear of the marketplace

"Let us never negotiate out of fear. But let us never fear to negotiate."

-- John F Kennedy

"In North America and Europe bargaining is restricted to expensive or one-of-a-kind items (automobiles, jewellery, art, real estate, trade sales of businesses) and informal sales settings such as flea markets and garage sales. In other regions of the world bargaining may be the norm even for small commercial transactions. In Indonesia and elsewhere in Asia where locals haggle for goods and services everywhere from street markets to hotels, haggling is a strong cultural tradition that even children learn from a young age."

-- Wikipedia, "Bargaining"

There are some places in the world where to get a bargain means that you've used your market savvy to nick some of the vendors' profit back for yourself. It's a win in the game. In America, getting a bargain generally means the vendor had decided to lower her list price on a certain item for a short period of time. There is a "win" involved, but it's more like winning at slots than winning at chess. You'd not believe it from looking at the crazed shoppers waiting out front of Wal-Mart on Christmas Eve, but American-style bargain hunting is a far more passive experience than it is elsewhere.

I have a hypothesis that Americans are afraid of haggling. It's a carefully taught agoraphobia - in the true translation of the term, "fear of the marketplace." It has a twofold basis. On one side, the dogma that only the most clever can successfully negotiate a deal. On the other, the forced separation between buyers and sellers. Transactions are automated and anonymized. The pace is quickened to limit a consumer's ability to research actual value.

This is a pretty major topic, so I'll be doing this as a multiple article series over the next couple of weeks. To give you an idea of where we're headed, I've provided this handy timeline.

Spiffy, no?

(more…)

More Articles About: agoraphobia, bargaining, ebay, first-time buyers, groupon, haggling, landlords, lists, negotiation, opinions, planning, rent vs buy, renters, responsibility, saving money, selling a home, timelines

Tag Archives: agoraphobia

How to Save 35% on the Total Cost of Your Home

Confronting our Agoraphobia, Part IV: The Active Shopper’s Guidebook

Let's Get Ready to Rumble! (Or at least have a polite chat.)

Level One Negotiation - learning to talk & think for yourself:

Confronting our Agoraphobia, Part III: The Long Road Back

Where We've Been

Confronting our Agoraphobia, Part II: the Bad Guys are Winning

Rollback Further

Confronting our Agoraphobia, Part I: Carefully Taught

Fear of the marketplace

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