New cars and the true cost.

I am sure you have all heard of sticker shock in relationship to any given item. I experienced a bit of sticker shock today when I saw the statistic that Americans have over 1 Trillion dollars of car debt. You read that correctly, Trillion with a T. In a society where debt is passed out like candy, think about these two things before you take your next credit plunge: Face the reality of what we need vs what we want and face the truth of what will happen if you by a cheap used car and pay cash.

• To start with you need to face reality and consider the cost of buying things like a new car that will lose 11% of its value the moment you drive it off the lot. Ask yourself WHY, why do I really need a new car. The key word there is need, we have very few things in America that are truly a "need". We need food and water to live, we want a new car and nice things. So I ask again why do you NEED a new car and how much is it really going to cost you? 

• There are few things that depreciate faster than cars yet people continue to spend massive amounts of money on them. Now don't get me wrong, I like having a nice car as much as the next person and there is something to be said about reliable transportation. I have been there I paid $22,000 for my last car and sold it for $7,000 after I paid it off. It was the worst investment I have ever made. I now drive an 8 year old truck that I paid cash for, it is clean and reliable which is all anyone really needs in a vehicle. 

• There is a psychological side to having a nice car. Society has conditioned us that having a nice car is equated with success. Just stop and think about that for a second, you paid 20, 30 or 40 thousand dollars for a car. A car that you could not afford to buy so you financed it for five to seven years. This is a sign of a successful person in America today and one that millions of people buy into.  

Call a car what it is. Plain and simple, a car is a tool and like anything else it is there for a purpose. A car is nothing more than a method of getting us from point A to point B, nothing more nothing less. A car doesn’t better your quality of life, it doesn’t improve your health and it doesn’t make you more successful (no matter what society says). So break the cycle, if you have a car payment throw a little extra every month and pay it off. Drive it till it becomes more expensive to fix than to keep. When it does become more expensive to fix than to get rid of pay cash for your next car. It may not be the nicest car in your friend group but it will likely be one of the few paid for cars amongst you all. 

The moral of the story is Expectations are real

What kind of experience is your client expecting you to deliver? Are they expecting you to find them a home in a matter of day, weeks or months? Is your client expecting you to sell their home for over market value in a matter of a week? These are all things that the client is likely expecting whether or not you bother to find out. So do yourself a favor and find out the clients expectations from the start so you can manage them effectively. Ask yourself, what kind of experience is the client looking for me to deliver? Failing to know the answer to that question could cost you in a big way. I will share my personal experience of how I personally failed to manage my own expectations and paid the price.

• My wife and I are in the process of buying a home. We knew going into it that it was an active market but we thought our situation would be different since I was our realtor. As you can imagine we did not manage our expectations going into the house hunt. I had failed to manage the expectations of my client (my wife) and it led to unnecessary anxiety and stress. 

• Managing expectations is important with buyers but it is equally if not more important to do when working with sellers as well. I have clients in this market that regularly feel they can price their house high because there is shortage of houses out there. This is not the case, houses that are overpriced tend to sit for a while and only after dropping the price do they get serious interest. 

• At the end of the day all you can do is advise your clients what the best route to go is. What route they choose to take is up to them, but it is important to manage expectations from the get go regardless. Failing to do so could result in it negatively impacting you and your clients relationship. A seller that overprices their house with the expectation that it will sell quickly is not going to take kindly to the reality that it hasn’t sold after a month or more on the market. If you don’t clearly define the expectation the seller is likely to blame you for less than desirable result. 

The moral of the story is that you can’t control what people will or will not do. You can to some degree control how they will or will not react to a given situation. Managing expectations ensure that you and the client are on the same page. A good rule of thumb is under promise and over deliver. No one is going to get mad at you because you delivered exactly what they expected. People will quickly get upset if you under deliver though. This goes back to managing expectations, what kind if experience is your client expecting you to deliver? Answer that clearly from the outset and you will be much better of for it.