Jade Jean Blog

When Jim left, Frank, the $1,000-a-month brother, was called. “Frank,” said the supervisor, “I wish you’d go out to the airport and get an inventory of the cargo plan which was just brought in by Far East Importers.”

An hour later, Frank was back in the office with a list showing that the plane carried 1,000 bolts of Japanese silk, 500 transistor radios, and 1,000 hand-painted bamboo trays.

George, the $1,500-a-month brother, was given identical instructions. Working hours were over and he finally returned. “The transport plane carried one thousand bolts of Japanese silk,” he began. “It was on sale at sixty dollars a bolt, so I took a two-day option on the whole lot. I have wired a designer in New York offering the silk at seventy-five dollars a bolt. I expect to have the order tomorrow. I also found five hundred transistor radios, which I sold over the telephone at a profit of $2.30 each. There are a thousand bamboo trays, but they were of poor quality, so I didn’t try to do anything with them.”

When George left the office, the employer smiles. “You probably noticed,” he said, “that Jim doesn’t do what he’s told, Frank does only what he’s told, but George does without being told. The future is full of promise for one who shows initiative.

Taken From:The ROAD TO WEALTH

Some years ago, three brothers left the farm to work in the city. They were all hired by the same company at the same pay. Three years later, Jim was being paid $500 a month, Frank was receiving $1,000, but George was now making $1,500.

Their father decided to visit the employer and find out the basis for the unequal pay. The employer listened to the confused father and said, “I will let the boys explain for themselves.”

Jim was summoned to the supervisor’s office and told, “Jim, I understand that Far East Importers has just brought in a large transport plane loaded with Japanese import goods. Will you please go over to the airport and get a cargo inventory?”

Three minutes later, Jim returned to the office. “The cargo was one thousand bolts of Japanese silk,” Jim reported. “I got the information over the telephone from a member of the crew.”

Taken From:The ROAD TO WEALTH

“The seller pays it.” “Good. Now, there are other miscellaneous closing costs associated with buying property. This might include fees paid to banks to make loans, appraisal fees, insurance and tax impounds, miscellaneous transfer costs.”

“Correct,” Nancy said. “You’ll find that the largest costs in any real estate purchase are generally the loan closing costs on new financing— points and lender’s fees.”

“To clarify,” I said. “A ‘point’ is an up- front fee charged by the bank for the privilege of borrowing their money. One point equals one percent of the face amount of the loan. There are usually one four points involved with any new long-term loan. So on a fifty thousand-dollar loan one point would be one percent of fifty thousand, or five hundred dollars; two points would be a thousand dollars; three points, fifteen hundred dollars, and so on. Most of the time the buyer pays these points—except on some government backed loans. But remember, everything is negotiable. There are always creative ways to come up with closing costs without having to pay them out of your own pocket.”

Taken From:The ROAD TO WEALTH

“I’ll help you avoid that mistake in the future,” Nancy said. “What kind of costs might be expected at a closing?” I asked.

“To handle the paperwork, the closing costs run anywhere between thirty-five and one hundred dollars. The next cost would be for the title insurance. The premium for title insurance is based on the selling price of the property. It’s not like car insurance, where you have annual premiums. For instance, on a hundred-thousand-dollar house, the approximate premium would be a one-time six hundred dollar charge. Even after you sell the property, you are still insured for the period of time that you owned the property.”

“In some states, the buyer pays for the title insurance,” I said. “In other states, it is customary for the seller to pay this. In still other states, only attorneys are allowed to handle closings and check title. Nancy, how is this handled in Missouri?”

Taken From:The ROAD TO WEALTH

“Correct,” Nancy said. “Now, let me tell you about title insurance. Ticor is in the insurance business. We insure titles. The policy that we issue guarantees that there aren’t any defects in the title to the property you are buying. For instance, suppose an heir, who was thought to be dead, turns up ten years later claiming an interest in the property that you now own. Since we insured your title, it’s our problem to work things out with the heir. Or suppose Mary and John Doe own a piece of property as husband and wife. If John deeded his interest to another party without Mary’s consent, this would become a cloud on the title of the property. And you wouldn’t want to buy that property until that situation had been resolved. So we search the entire chain of deed. We report any clouds, liens or judgments against the property on what we call a title commitment. And if there’s anything on the title commitment report that you or the lenders don’t like, we work toward solving these things before closing.”

“Just as everyone needs life and health insurance,” I added, “every buyer needs property insurance. Nancy guarantees us that the property we are buying actually belongs to the seller.”

Nora joined in. “That reminds me. Someone once sold me some property he didn’t own. When I went to the title company to search the title, I learned that of the ten lots he was selling, he didn’t actually own them all. He’s still got $295 of my money.”

Taken From:The ROAD TO WEALTH

In the center of downtown Clayton, on a corner across from the park where we had jogged that morning, is a brown, two-story brick building with white trim. Emblazoned on the front in big black letters are the words “Ticor Title Company.” The Challenge team arrived just after lunch and was greeted by Nancy, a senior closing officer for the firm. She ushered us into a quiet conference room in the back on the main floor. We sat around the conference table.

“Nancy,” I explained, “is an expert in closing property. She makessure all of the details come together smoothly.”

She took my cue. “This is a closing room,” she began. “As soon as you have a signed contract between you and a seller, you bring it, and any other pertinent information, to me. We’ll sit down here and create an escrow account for this transaction. We call this `opening escrow” That’s just a fancy term for starting a file of all of the necessary documents to close the transaction—the sales contract, the, earnest money and your loan commitment letter if a new loan is required.”

“Nancy, if I could interrupt for a second,” I said, “We haven’t yet discussed the details of an earnest-money agreement. Earnest money is your deposit to hold the property. If we back out, the seller keeps our money, in some cases, as damages. Nancy will hold this deposit until the closing. If there is any dispute between you and the seller about the earnest money, she’ll keep it until things are resolved.”

Taken From:The ROAD TO WEALTH

“What do you think?” “Well,” Philip observed, “he was selling below the appraised value. Couldn’t we have profited from it?”

“Not unless we could buy it at least twenty percent below market. The seller claims it’s worth $44,000, but what if it’s only worth $42,000? Then it’s only ten percent below market. We need to get the price to $35,000 or lower—twenty percent to thirty percent off.”

“I’m still not sure of what to ask,” said Mary. “Just remember the five questions of value—flexibility, location, financing, price and condition. With practice, you’ll become as confident as you were yesterday morning picking a diamond out of fifty pieces of glass.”

The next experience I had designed for them was to take them to a title company and walk them through a simulated closing on a house. Within a matter of weeks each of them would be required to sit at a closing table, white-knuckled and nervous. It was time for a dry run.

Taken From:The ROAD TO WEALTH

“That’s what he told me … at least that’s what I thought he said.” She was learning to be more careful in her analysis.
“We took an hour and a half to inspect this property,” I continued, “but it was a valuable experience—good practice. Now you know what a cubic zirconium looks like.”

Nora had a brainstorm. “Well, right now he’s a zircon, but a couple of months down the road, he could become a diamond.”

“Right. Never can tell when the wind will change. Mary should still send him an offer. But can you see that we could have saved a lot of time and gas money by asking better questions over the phone? I try not to inspect a property until I’m certain the seller is a genuine don’t-wanter.

If a property fits within my very narrow set of parameters, I proceed further. If not, keep looking. It’s that simple. Shall we score this one?

Seller flexibility? One.
Location? Two.
Financing? One.
Price? Two.
Condition? Three.
Total: Nine.

Taken From:The ROAD TO WEALTH

I knew that I was just arguing now for the sake of arguing.
Obviously, the seller wasn’t the slightest bit flexible. Normally, I would have politely excused myself and been on my way to the next, perhaps more flexible seller. But for the benefit of my watching Challenge team, I continued, “So you’re saying, ‘I’m firm on my price, and I’ve got to have all cash” Is that what you’re trying to say?”

“Yes, but this house is a good deal. Even at thirty-nine thousand. I’ve checked most of the homes around here. …”
“Tell you what,” I said finally. “We’ll send you an offer in the mail. If you haven’t been able to sell, in a few months, our offer might start to look a lot better.”

“Sure. Definitely, as a last alternative.” “Thanks,” Mary said as we left. “I appreciate your time.” We all got in the car, and as we drove off we processed the experience together.

“OK,” I asked them, “was he a don’t-wanter? Obviously not. He wouldn’t come off either his price or his terms. Take it or leave it. Mary, I thought you told me last night that he was willing to carry financing.”

Taken From:The ROAD TO WEALTH

“Let’s see. …” The seller scratched his head. “At thirty- nine thousand it would probably be eighteen thousand.” “Okay. If you could get twelve or thirteen thousand cash within, say, thirty days, would you be willing then. …?” “Twelve or thirteen what?”

Mary became flustered at not knowing what to say next. She changed the subject. Then she excused herself and whispered to me, “He doesn’t really understand and neither do I.”

I decided to step in. We found the seller in the kitchen, where he was explaining how it was only eight years old.

“Excuse me, sir,” I said. “Getting to the bottom line, if you could cash out quickly, would you be willing to come off your forty thousand price? You never can tell how long it will take you to find a buyer.” “No. I’ll just wait till I can get thirty-nine five.”

“Even so,” I countered, “sooner or later it’ll cost you an extra thousand or two.”

“No, I’m not going to drop my price much.”
“Well, what price would you come down to?” I asked.
“Not below thirty-nine five. Why should I?”

Taken From:The ROAD TO WEALTH