Business Protection

Working in an accounts receivable department taught me a valuable lesson: “A sale isn’t a sale until it’s paid for.” Having also worked in costing and drawn plans for business expansion, I would add “A sale that isn’t profitable may be worse than no sale at all. The exception to the latter is when the sale “buys” you a new customer, and then you must calculate the lifetime value of that customer, and all referrals from that customer, to determine if a short term loss equals worthwhile long term gain.

Too many business operators focus on volume, instead of profit. Often higher profit is achievable at lower volume, by raising prices to increase profit margins, improving quality and service, and targeting customers who don’t mind paying a little extra, but look at value over price.

The secret to success is to decide what market you are in, then tailor your policies to that market. If you are in the discount market, selling on price, you must achieve volume and cut back on service, packaging, and other costly extras that eat away at your already small margin. At mid-range prices, you can afford to offer a higher standard of service, packaging, and after-sale support. At the high end, it’s all about offering top quality right across the spectrum. Expect your customers to pay top dollar, but make sure they get what they pay for.

With your product package and pricing formula established, the next step is to build processes that guarantee you deliver what you offer, at the lowest possible delivery cost. Systems often seem unnecessarily cumbersome, but a well-designed set of processes, clearly and accurately documented, is invaluable in a growing business. Your systems should ensure consistency and efficiency, and eliminate the problems that inevitably arise when employees are given too much discretion.

In subprime mortgage, Real estate also has the main role why there is subprime mortgage.

Let’s discuss real estate agents. In 2007, we bought a home, and also sold a home. The agent we used to purchase our home was absolutely fantastic. In our opinion, she went above and beyond to make our deal happen. She answered every phone call, followed up on every concern and was the epitome of professionalism. We consider this individual to be a friend, and we have sent referrals her way that have resulted in her earning additional commissions. We will continue to recommend her to all who ask or mention that they’d like to buy or sell a home in our area.

The real estate agent, we used to sell our home, could not have been more different. We got our old home ready to sell prior to closing on our new home. We decided to list it as “For Sale by Owner.” In the event that we didn’t sell this home on our own, it was our intention to list it with an agent as soon as we had closed on the purchase our new home.

Literally, from the day we put the sign in front of our home and listed it on a “For Sale by Owner” website we were inundated with phone calls from real estate agents. We were told many lies and were constantly harassed; although we had already made it quite clear to every agent who called, and there were more to 60 who did; that we were willing to pay half the commission-the same as they would have received had they sold another agent’s listing. We also told every agent that called that we had already lined up an agent to sell our home in the event that we chose to no longer sell it ourselves. Our deadline was the closing date of our new home purchase. We did have an interested buyer who shortly after our closing date decided to keep looking so we listed our home with a local agent so that we could concentrate on getting our new home ready for our moving date at the end of the school year.

This agent showed our home a maximum of two times and got an offer which we accepted. We ended up getting $1,000 less than we had wanted in a declining Real Estate market. The agents who had called many times to harass us called our listing agent on a number of occasions and he lied telling them that the house was under contract when in fact it wasn’t at that time-clearly a breach of our agent’s fiduciary duty. Quite frankly an ethical agent would have continued to show our home until closing in the event that the deal fell through.

But wait, there’s more. Our agent also acted as the buyer’s mortgage broker. At the closing table, we learned that he had signed documents from the buyer stating that he (our agent) represented them and we had signed documents stating that he represented us. We also learned that the buyer had effectively put down approximately 2-3% of the purchase price when financed closing costs were factored into the equation.

Their first mortgage had what we thought was a high fixed rate and their second mortgage came with a rate in excess of 8.5%. Because the closing happened in August, literally in the midst of the first wave of the meltdown, if they didn’t close on the day they did (August 31st, 2007), Citibank wasn’t going to extend their rate. When my wife & I have bought houses in the past, it had always been a very happy day. These people looked absolutely shell-shocked at the closing table. I’m not convinced that they knew just how much their monthly payment was going to be until closing day. We knew down to the penny well in advance having budgeted and planned everything on a spreadsheet.

Were these people stupid or just inexperienced and mislead by a greedy combination of real estate agent & mortgage broker? I’m extremely confident that they are intelligent people but inexperienced and taken advantage of by an unscrupulous agent.

It just our opinion about mortgage meltdown analysis