Thursday, January 15, 2009

Fundamentals are what count

I've been meaning to get this topic off of my chest for awhile so here it goes..... Everyone, including the papers, the pundits and now the politicians say we are in a bad economy, right? So why is it that when I call a company for service they don't get back to me or lose my information? I'll give you an example of this. I called a permit expediting company several months ago because I thought I needed professional help in legalizing a structure. I left not one but two messages w/the receptionist and I never received a call back. Here's another interesting story, I ordered an oil delivery for a home of mine that is tenant occupied and asked if I could purchase a service contract for said home. I was told that one of their service technicians would need to look the burner over before they would agree to give me a service contract to make sure that the burner had no real problems. I scheduled the appointment between the service technician and my tenant. I never received a follow up call to let me know if I would be eligible for a paid service contract. 6 Weeks later my tenant tells me that the heat just stopped working so I called back this company to schedule in a service call and they said that their service technician had no interest in fixing my burner even if I agreed to pay them in full for parts and labor. I was completely shocked that a company that is in the business of fixing oil burners had no interest in taking my money and fixing my heating equiptment.  I promptly called another oil delivery/service company and had my oil burner fixed w/in 4 hours at a total cost of $199. This excellent company is Taylor Fuel and I am now a grateful customer of theirs while the other company will be on my blacklist. What I really think is that good businesses have good fundamentals and some how they will weather the economic storm while businesses w/poor fundamentals will go out of business and it will not be the economy's fault it will be their own damn fault.

The same lesson can be applied to home buying. Fundamentals count. The reason we are in such a foreclosure mess is that the average home buyer threw fundamentals in the garbage. They just wanted what they wanted, when they wanted it, especially if their friend or cousin had it. I saw people get into bidding wars on 2 bedroom homes in so so locations. I saw buyers overlook their own inability to make a mortgage payment just so they could say they owned a home. 

Today's buyer is just plain afraid. They are afraid of making the same kind of mistakes that thousands before them made. They are afraid that they won't get mortgage financing. They are afraid that they will lose their jobs. I understand this fear however it was once said that "the only thing to fear is fear itself". Fear is there to make you think things through and not leap before you look which is a good and healthy thing. Fear that prevents you from making meaningful and positive decisions and choices is just baseless fear that paralyzes. Once you have analyzed a situation properly it is time to make a decision based on fundamentals and get on with it. Waiting for the sky to fall like "Chicken Little" is no way to live.  


At 1/17/09, 5:29 AM, Anonymous Anonymous said...

Well put. Fundamentals like local income, property tax levels, and rents should drive any decision on a house price for a buyer. Of course, job security is critical in the decision about whether or not to buy at all.

Emotional factors still play a role. Sellers still think that fantasy prices won't insult a buyer. And with record home ownership rates the only buyers with money (ability to buy) are those curmudgeons who ignored the hype. So there is a profound standoff between sellers and buyers. As long as the seller doesn't need money and the buyer can continue to rent, the standoff will continue.

Soon clever agents will run a different kind of auction. The buyer will pick three houses and let the three owners (sellers) bid against each other by lowering their price. This method would work well in "cookie cutter" towns with many similar houses.


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