I received a call the other day from a young couple wanting to take a look at my new construction project. Because the building is starting to look more and more like a building, I recommended that they meet me at the site so we could walk through the units – albeit still a skeleton. For those who can’t visualize the space while it is taking shape, I knew it could be a crap shoot, but hey – they could at least see it in progress. The plans were taking life.
I was at the site a few minutes before our scheduled appointment, checking up on the progress, pleased to see that the steel staircase had been installed. We could use stairs, not ladders.
At roughly 2:00pm, a jet black, late model Range Rover Sport with chrome tipped exhaust screeched to a halt in front of the building. It was snazzy. Out hopped my potential clients – young – attractive almost 30-something couple. Unfortunately, not quite dressed to walk through an active construction site – but we’d manage.
We introduced ourselves.
“I like your car” I said.
“Yeah – it’s a sweet ride” the husband said.
I handed them the marketing brochure and rattled off my schpel regarding the developer, the construction method, available finishes, delivery etc. I asked them about their timing – what was prompting a the search for a new home?
“We want to take advantage of the market” the husband stated. “I’ve been reading that home prices are way down and developers are really hurting – we want to make a deal.”
Can’t say I haven’t heard that reason before.
“Do you have a home to sell?” I probed.
“Umm – we’re not sure if we’ll sell. I think we may keep our current place – at this point, we’re expl….”
“We’re expecting a baby and we need more room” the wife interjected. “We have a 2 bedroom condo that we purchased when we got married 2 years ago in Lakeview. We’re not sure what we can get for it – so we don’t know if we should sell our not.”
Ahh – the voice of reason.
“Honestly, that is a good question” I said. “If you’re looking to step up, now is a great time to be considering a move, but if you’ve got a home to sell – particularly if you purchased in the last 3 years or so, it may be tough to break even. Plus, financing can be a challenge. If you can qualify for conventional financing, you should be in good shape.” I said.
“Do you need the equity out of your current place to make a move?” I asked.
Blank stares.
“I told you not to buy that car on our home equity” the wife said.
“Like I was trying to say before” the husband said, “we’re just exploring our options.”
Tom says:
You just summed up the entire housing crisis. Nice!
October 7, 2008 — 1:40 pm
David Shafer says:
Pretty funny. Although he might have had to get a higher interest rate for the car from the dealer, rather than the HELOC!….. Of course, the car dealers are in big trouble and probably would have given them free financing or at least a low interest rate!
October 7, 2008 — 2:09 pm
Miami Beach Attorney says:
People seem to have received such a low quality financial education, if any, that they are easily taken in by any loan advertising. People here “Tap into that extra wealth in your home now!” and they do.
October 7, 2008 — 7:56 pm
Malok says:
Really great example of whats going on out there (sorry you got to be the one to “enjoy” the experience though). Taking a positive asset (like equity), and throwing it away on a depreciating asset (like most cars) and leveraging yourself out like that is just really short sighted.
October 8, 2008 — 9:14 am
SM says:
Great story. Unfortunately that is the same thinking, spending out of your means, that many people in this country need to fix. It’s amazing what people will spend their money on without thinking of the ramifications.
October 8, 2008 — 3:27 pm
Chris says:
Yep I saw that all the time. Once I went over a couples house because they called me about an investment property…two brand new H2’s sat in the driveway of a so so house. As soon as I saw that I got a bad feeling. Well they couldn’t afford a shed, guess where all there equity was?
As my Grandmother who was a RE agent for 30 years always said. “If they pull up in a new car they can’t afford a house, its the ones with older cars that have money, don’t let them get away.”
October 8, 2008 — 7:42 pm
Thomas Hall says:
Thanks everyone for your comments – I do think this was a perfect example of what went wrong.
Malok – perhaps the irony is the Range Rover may not have lost as much value as their condo??? – wait, it’s a British car … never mind. 😉
October 9, 2008 — 7:43 am