Business Boosting Articles - Real Estate & Wholesale Product Sources

Cash At Closing
A close-up look at ways to get cash back at closing
Tim and Roy Stitely, an enthusiastic father-and-son team from the
Washington, D.C. area, have their buying formula down pat. They don't close
a deal unless they walk away with cash - a lot of cash - in their pockets.

The Stitelys buy property from an investor who renovates row houses and
quickly flips them for a modest profit. In addition to the amount the investor
pockets at the end of closing, he pays the Stitelys a $5,000 rebate as well as
$5,000 for closing costs.

For example, in one transaction, the Stitelys borrowed $39,000 from the bank
for a property appraised at $50,700. The contract specified that the investor
receive $29,000 and the Stitelys receive $5,000 cash and $5,000 toward
closing costs. That means a quick profit for the seller, who picks up the
fixer-uppers for between $5,000 and $15,000. For the Stitelys, it means cash
back at closing - and it's a lot easier to do than you might think. "It gets the
deal done for the seller, and we actually come out with $5,000," says Tim.
Negotiate with sellers
There are a number of ways buyers can leave the closing table with more
money than they walked in with. The two critical ingredients are these: finding
the right sellers and not being afraid to negotiate for cash back.

If you think the sellers might entertain a cash-back offer in order to move their
property, then ask. All they can do is say no.

For example, you could offer to buy a $100,000 property that needs $10,000
work if the seller rebates you the $10,000 at closing. Often the work won't
cost as much as anticipated, and you can keep the difference.

One investor included in her offer a provision for $1,000 cash back from the
seller to cover unspecified "one-time non-recurring costs." The seller was
happy to agree to the provision in order to clinch the deal. The buyer wisely
avoided some of the anticipated repair costs and was able to keep the
amount not spent.

Very motivated sellers - those just a step away from foreclosure, for example -
may flat out pay you to buy their property, especially if they have little equity
in it. In such cases, you could offer to buy it for the amount of the mortgage
and have them pay all closing costs. It could be worth it to the seller to get out
from under a problem. Remember - the key to making a successful play for
cash at closing is to ask. Negotiating with motivated sellers could mean
money in your pocket.

This article is old, as you can tell by the real estate prices, but the essential
information is valid, nonetheless.

For people who are starting a Home-based ECommerce Business, one of the
things that's least understood by most is the need for basic Market Research.
There are far too many people failing out there because they simply grab any
product they can get ahold of, slap it in an Auction or on a web site, and
expect it to sell.

A couple of days ago, I got an email from someone who was thanking me for
the free information about ECommerce that she found on our web site. She,
like most people, had been struggling with the concept of Wholesale
Distributors and Wholesale Pricing, and had found the answers she needed
on our site. Somewhere in her email, she happened to ask me how I first
learned about Wholesale Distribution.

Now, I've spent years writing ECommerce articles that have been published in
many different languages all over the world. My company, Worldwide Brands,
Inc., teaches people through our web site, and our Customer Service
department, all about Wholesale Suppliers, ECommerce, Market Research,
and much more. I'm also a Founding Partner in a Wholesale Supply company
in New York. So, I've been around the business for a long time, and learned a
lot along the way.

As I started writing all those things in my reply to this person, I realized that
she hadn't asked for my resume! She had asked where I first learned about
Wholesale.

It occurred to me that I actually learned about wholesale long before I ever
grew up and went into business. The few simple things I learned about
wholesale back then apply so well to ECommerce today that I just had to tell
her (a shorter version of!) the following story:

Long, long ago, in a neighborhood far, far away, Chris Malta began learning
about Wholesale. He was just a tyke then, only ten years old. Chris wanted to
earn some extra money for the upcoming Christmas Season, way back there
in 1970.

He tried shoveling snow out of people’s driveways, but there’s a lot of snow in
Western New York State. Big trucks with nasty old snowplows kept driving by
and shoveling the snow back into the driveways. He tried doing chores around
the house, but there really wasn’t enough to do to earn him the Christmas
Money he wanted.

One day, Chris’s mother realized his plight. An astute businesswoman, she
looked down at him and seemed to come to a decision.

“Why don’t you get your coat”, she said. “I’ll show you how to earn money like
the grownups do”.

Half an hour later, Chris and his Mom were at Beansy Altman’s Wholesale
Outlet, in downtown Rochester, NY. It was a ramshackle place, shivering in the
winter shadow of an expressway overpass; a big old four-story brick building
that looked almost abandoned. Inside, though, it was warm, and there was a
bustle of people weaving their way through stacks of crates and boxes. They
were picking this or that item out of this or that crate or box, looking at it, and
moving on.

Through the dim lighting and the smell of damp cardboard, Chris saw an old
man waving to his mother.

“Millie!” he said, “did you bring a helper with you today?”

Chris’s Mom smiled and said, “Beansy, this is my son, Christian. He wants to
earn a little Christmas Money this year”.

“Ah!” smiled Beansy. “Another businessman in the family! Well, all right. We
want Christmas Money, we look at Christmas things!”

An hour later, the trunk of Mom’s car was packed full of thick, colorful
Christmas candles, and little decorative plastic Holiday wreaths that fit around
the candles’ bases.

On the drive home, through the gathering dark and a light fall of snow, Chris’s
mother explained the glorious concept of Wholesale to him.

“Mr. Altman sold us one hundred Christmas Candles for twenty five cents
each”, she said. “He sold us the plastic wreaths that go around them for
twelve cents each. So, how much did we pay for the candles, just by
themselves?”

Chris had to think for a minute. It would be another two years before he would
meet Mr. Irwin, a wonderful teacher who would finally be successful in lighting
the Eternal Flame of Mathematics in Chris’s young mind. He struggled through
to the answer, though.

“Twenty five dollars for the candles”, he said.

“Right”, said Mom. “Now, how much did we pay for just the wreaths?”

Chris was warming up to the game. “Twelve dollars”.

“Right again. Very good! Now, tell me this; how much did we pay for one
candle and one wreath, together?”

Some more thought, and a quick double-check on the trusty ole finger-
calculator: “Thirty seven cents!” announced Chris.

“Thirty seven cents”, agreed Mom. “How much do you think they’re charging
over at Woolworth’s for those same candle-and-wreath sets?”

“I dunno”.

“A dollar twenty nine. They’re very nice candle sets. I just bought two of them
there yesterday. So how much less than that did we pay for each candle-and-
wreath set?”

That one set Chris back a step, but before he could try to answer, Mom said,
“That’s ninety two cents, Honey. We got them for ninety two cents less than
they charge in the store”.

“Now”, Mom continued, “who do you think might like some of those candle-and-
wreath sets?”

“I dunno”.

“Are you sure about that? Don’t you think Mrs. Gallucci next door would like to
have one or two?”

“Sure, I guess”.

“Sure she would!” said Mom. “How about the rest of the neighbors? Mrs.
Furius? Mrs. DiCiacci? Miss Cerasani? Mrs. Beilaski, Mrs. Carlevatti, Mrs.
Toth, Mrs. Sengle, Mrs. Cook, Mrs. Sadack, Mrs. Anderson…”

The list went on and on. Mom knew the neighbors’ names like she knew the
names of her own kids. As she spoke, Chris’s eyes grew wider and wider with
the realization that he was going to sell those candle-and-wreath sets to the
neighbor ladies, and make his Christmas Money!

Mom continued; “Now, how much do you think they’d like to pay for those
sets?”

“A dollar twenty nine!” Chris declared proudly.

“No!” said Mom. “If they have to pay the same price they pay in the store, they
might not decide to buy them. But, if they find out they’re getting them for less
than the store sells them for, and they don’t have to drive through the snow to
get them from the store, they will want to buy them. So, what you do is charge
a dollar for the sets. Do you know how much money you’ll make if you sell all
one hundred sets at a dollar each?”

“One Hundred Dollars!” Chris exclaimed, excitedly.

Well, not quite”, said Mom. “After you pay me back the thirty seven dollars I
spent to buy the sets at Mr. Altman’s place, you would make sixty three
dollars!”

Well, thought Chris, it wasn’t a Hundred Bucks, but still…Holy Smokes! Sixty
Three Dollars! To a ten year old kid in 1970, sixty three dollars was a fortune
in spending loot!

When they got home, Mom went over the major points with Chris once more:

“Let them know that you charge less than the store does for the exact same
thing, and remind them that they don’t have to leave the house to get it. They’
ll buy it from you, Hon. And you be sure to be polite and say Thank You!”

(Thirty four years later, Chris is sitting at his computer keyboard, writing this
article. Besides getting a little misty over the memories, he is suddenly struck
by the amazing similarity between what his Mother suggested as a sales
technique in 1970, and the basic foundation of all Ecommerce today! “Less
than the store charges, and they don’t have to leave the house…”. But, that’s
not part of the story…not yet, anyway. Not for many more years, for ten year
old Chris!)

So, Chris went out selling Christmas Candles, crunching through the frozen
snow after school each day, in early December 1970. He didn’t sell them all,
but he paid his mother back and made a nice pile of Christmas Money. His
Mom put the remaining candle sets in the attic, and he sold the rest of them
and more the following year.

During that year, and many others, his Mom helped him make many other
trips to Beansy Altman’s and other wholesale outlets. St. Patrick’s Day, Easter,
Mother’s and Father’s Day, Fourth of July, etc., etc. With Mom’s help, Chris
bought seasonal products at wholesale all year round, and sold them to the
neighbors, at a reasonable markup, of course. :o)

Why did I think this story was important enough to write an article about?
Because it illustrates a very important point. Whether my Mother did it
consciously or not, she arrived at a product for me to sell through Market
Research!

Think about that story for a minute:

1. My Mother knew where my customers were. They were right there in my
neighborhood, within easy reach of my sales vehicle; door to door selling.

2. She knew the "Demographic" of the customers; they were middle-class
women in their early thirties. In 1970, this was a group that was almost
exclusively homemakers, thus they were actively taking care of and decorating
their own homes.

3. She knew that they would be very receptive to buying a Holiday decoration
from me, because (a) it was the Christmas Season, and (b) what middle-class
woman in her early thirties in 1970 could resist buying something (at a
bargain) from a ten year old kid?

4. She knew who the competition was, and what they were charging for the
product; Woolworth's Five and Dime Store, $1.29. That gave her the proper
price point to sell the product with the added convenience of buying it right at
one's own door; $1.00.

5. She knew where to get the product at Wholesale; Beansy Altman's.

That's Market Research.

The basic concept, the core business of what you and I do as Retailers, hasn't
changed in 34 years. It hasn't changed in 340 years. It hasn't even changed
in 3,400 years. Thousands of years ago, traders would travel to distant cities,
bring new and exciting things back to their homelands, and place them on the
ground in an open-air marketplace for passers-by to purchase. Hundreds of
years ago, merchants in the fledgling US packed wagons full of goods in the
East, and made the trek out West, where they used those wagons as
storefronts to sell their goods to those who wanted or needed them. Decades
ago, people had wholesale supply companies deliver products to their retail
stores, where customers gathered to buy them. Today, we use email and
electronic ordering systems to have products sent directly from the wholesale
warehouse to our customers' doors.

None of it is possible, though, without Market Research. None of those
Retailers, from the sand-whipped caravans on the ancient Silk Road to the
manager of the Woolworth's Five and Dime on Winton Road in Rochester, NY,
would have sold a thing if they hadn't known what the customer wanted!

So, before you get caught up in the technological hype of instant online
stores, cross-linking, mass emailing, affiliate programs, blogging, search
engine optimization, pay per click advertising, etc., etc., etc., go back to the
basics for a minute or two. Think about who your customers are, who your
competition is, what your customers want, and where you can get it at
Wholesale. Without that, all the shiny new technological methods in the world
mean nothing.

We have a great deal of FREE information on Market Research and much
more on our web site, and you are welcome to it at any time.

Even today, as far as I've come in the business world, the image that comes to
mind the most when I think about sales is very simple. I can still see it like it
was just last week. Just me, by myself, ten years old, crunching through the
frozen snow, happily selling Christmas Candle after Christmas Candle to my
neighbors. Because my Mom knew they would buy them.

Chris Malta
Founder/CEO
Worldwide Brands, Inc.