How to not get ripped off in your line of business...

[Butcho22]

I figured it would be very imformative if everybody would post how people get ripped off in their line of business.

I'll start. I'm a mortgage broker.

The most obvious way I could rip you off is simply by charging more fees to do your loan than are actually necessary. We are allowed to charge as little as we want, but no more than 5 points on a loan (5%).

Of course I'm always going to shoot high. All you would have to do is ask your broker how many points he's charging you. If he says anything more than 1 pt, tell him you're shopping around and you'll get back to him. At that point, you can either actually shop around, or come back to your broker and tell him you'll do the loan through him, but only if he drops his fee to 1 point.
The loan amount shouldn't really factor into the broker fee, but it almost always does.
If it's anything over 250k, tell the broker you'll do a loan through him only if he charges $2,500. Just because you're refinancing $700,000 doesn't mean your broker is doing any extra work compared to a $150,000 loan. The larger loan amount only makes the fee appear more reasonable.

That is on the front end.

We also make money on the back end of loans, which is called "yield spread premium".

YSP explained in depth, Wiki

In short, if you qualify for a rate of 6%, but your broker signs you up at 6.5%, they get paid yield spread for getting you to take the higher rate. The lender makes more over the life of the loan, so the broker gets a cut of that.

I hate to say it [img]/images/graemlins/grin.gif[/img], but you really should be shopping around to a few different brokers unless you're dealing with somebody you absolutely trust.

In many cases, it's beneficial for the borrower to roll the closing costs into the broker's fee, which is tax deductible. Any broker can do this, and many will offer, but you should bring it up yourself if they don't.

There is no such thing as a "no closing cost" loan. It's just an attractive way of saying, "we will roll your closing costs into our fees."

Lastly, when you have been sent the GFE (Good Faith Estimate), call your broker back and tell them it's a deal if they waive (x) fee. There is usually an admin fee around $350, and a processing fee of ~$600. These are part of your closing costs, but they can actually be waived without rolling them into the broker fees, as opposed to the underwriting fee.
Just tell them, "If you waive this fee of $600, I'll sign these papers right now and fax them to you."
If you're dealing with a big corporation, they might not waive it. Smaller companies would never lose a deal over a $600 fee.

Brokers, feel free to add to this if you see fit. Or flame me for writing all this, meh.

All,

Please help out the 2+2 community by telling us how to not get ripped off purchasing products in your line of work.

[cianosheehan]

This isn't my line of business, I'm more on the receiving end, but I've had to put up with enough crap to be able to say a thing or two.

If you are getting any web-design job done, make sure you set some things straight before going ahead with whatever developer you are dealing with.

Firstly if you value any kind of confidentiallity get an NDA (Non disclosure agreement) signed between you. Make it as extensive as you wish. If they have a problem with any of the content they will let you know.

Your designer will give you an estimated build time. In my experience the speed of completion is ALWAYS overestimated. E.g if they say 2 months, expect it in 4 months. You have to make it clear to them at the start that you are aware of the delays that can come up during development and that you want absolute assurance that they do their best to deliver when they say they do. You may try figure some kind of deal to protect yourself from this, such as reduced fee if completed x amount of days over deadline. Although finding a company who would agree to this may be hard.

Most developers will give you a quote for the whole build which reflects their standard $$$/hour, and other associated costs. This quote doesn't change throughout the build. Since they know they will be getting their money either way, it doesn't really matter to them when the job is finished, because they are getting their money for hours put in either way.

If the development company is busy and working on multiple projects at once, they may have so much going on that coordinating a build and delivering it when promised becomes impossible.

Another thing, if you want X solution built, to combine with Y and resolve problem Z, developers may be aware that X+Y wont resolve Z, but they will build X and charge you for it anyway. Then you find out that Z isn't resolved, but hey, it's not their fault because you only asked them to build X. So, interrogate and confirm and explain the full scope of your problem, and make sure what you want done is what's needed to be done.

If you are going to hire a company, I'd recommend going through their portfolios and contacting anyone who they have worked for before, and making sure they are not a bunch of cowboys.

As I'm saying this, I just want to say that there are great and honest web developers out there. But there are definately those who will mess you around and not really care about the true resolve of your solution.

-Cian

[NajdorfDefense]

Never buy a muni bond unless it is on the offering date. You are paying very large markup you cannot ever really quantify.

Also, munis are exempt from SEC regs, so you might pay more than 5% markup even.

[suzzer99]

[ QUOTE ]
This isn't my line of business, I'm more on the receiving end, but I've had to put up with enough crap to be able to say a thing or two.

If you are getting any web-design job done, make sure you set some things straight before going ahead with whatever developer you are dealing with.

Firstly if you value any kind of confidentiallity get an NDA (Non disclosure agreement) signed between you. Make it as extensive as you wish. If they have a problem with any of the content they will let you know.

Your designer will give you an estimated build time. In my experience the speed of completion is ALWAYS overestimated. E.g if they say 2 months, expect it in 4 months. You have to make it clear to them at the start that you are aware of the delays that can come up during development and that you want absolute assurance that they do their best to deliver when they say they do. You may try figure some kind of deal to protect yourself from this, such as reduced fee if completed x amount of days over deadline. Although finding a company who would agree to this may be hard.

Most developers will give you a quote for the whole build which reflects their standard $$$/hour, and other associated costs. This quote doesn't change throughout the build. Since they know they will be getting their money either way, it doesn't really matter to them when the job is finished, because they are getting their money for hours put in either way.

If the development company is busy and working on multiple projects at once, they may have so much going on that coordinating a build and delivering it when promised becomes impossible.

Another thing, if you want X solution built, to combine with Y and resolve problem Z, developers may be aware that X+Y wont resolve Z, but they will build X and charge you for it anyway. Then you find out that Z isn't resolved, but hey, it's not their fault because you only asked them to build X. So, interrogate and confirm and explain the full scope of your problem, and make sure what you want done is what's needed to be done.

If you are going to hire a company, I'd recommend going through their portfolios and contacting anyone who they have worked for before, and making sure they are not a bunch of cowboys.

As I'm saying this, I just want to say that there are great and honest web developers out there. But there are definately those who will mess you around and not really care about the true resolve of your solution.

-Cian

[/ QUOTE ]

This is very interesting to hear from the receiving end. I'm a web developer who's worked on everything from one page websites to $10 million corporate projects with an AJAX front end. At many different places I've had to clean up after soooooo many horribly done jobs--both by internal employees who had no clue what they were doing--and by external shops that also had no idea what they were doing, and managed to rape the client in the process. It's hard to say which is worse to clean up after, generally the latter.

In my estimation you could do all the stuff you list above right and still have about a 50/50 chance of getting royally screwed. But at least that's down from maybe a 75% chance of disaster 5 years ago and a 95% chance 10 years ago.

[z28dreams]

I work doing web marketing stuff, and I would say the biggest concept is simply to negotiate EVERYTHING.

I've negotiated $20 CPM ( cost per 1000 impressions ) down to $1.50 CPM.

While standard rules of negotiating often say to let the other person make the first offer, I believe that sometimes it's better simply to state right up front what you think you service is worth to you, or what you can afford.

It's much easier to argue in negotiations that "you can't afford it" rather than "you're making too much money".

[Your Mom]

If you're going to trade stocks or options (esp. options at the open), don't use market orders. It's basically giving the market maker or specialist or whoever an invitation to [censored] you.

[Rootabager]

This is a great idea for a thread. I hope it blows up.

[NajdorfDefense]

[ QUOTE ]
If you're going to trade stocks or options (esp. options at the open), don't use market orders. It's basically giving the market maker or specialist or whoever an invitation to [censored] you.

[/ QUOTE ]

Never trade a muni bond. Buy new issues and hold. Otherwise, you are getting screwed by the desk, if not the desk and the salesguy's markup.

[Roswell]

[ QUOTE ]
If you're going to trade stocks or options (esp. options at the open), don't use market orders. It's basically giving the market maker or specialist or whoever an invitation to [censored] you.

[/ QUOTE ]

Can you elaborate on this? I have made a couple stock purchases recently, and I chose "Market" as the type of order. I noticed the trade settled for slightly higher than the "Ask" price. Should I have chosen "Limit" instead? Should I choose the ask price as the limit value?

[cianosheehan]

[ QUOTE ]
[ QUOTE ]
This isn't my line of business, I'm more on the receiving end, but I've had to put up with enough crap to be able to say a thing or two.

If you are getting any web-design job done, make sure you set some things straight before going ahead with whatever developer you are dealing with.

Firstly if you value any kind of confidentiallity get an NDA (Non disclosure agreement) signed between you. Make it as extensive as you wish. If they have a problem with any of the content they will let you know.

Your designer will give you an estimated build time. In my experience the speed of completion is ALWAYS overestimated. E.g if they say 2 months, expect it in 4 months. You have to make it clear to them at the start that you are aware of the delays that can come up during development and that you want absolute assurance that they do their best to deliver when they say they do. You may try figure some kind of deal to protect yourself from this, such as reduced fee if completed x amount of days over deadline. Although finding a company who would agree to this may be hard.

Most developers will give you a quote for the whole build which reflects their standard $$$/hour, and other associated costs. This quote doesn't change throughout the build. Since they know they will be getting their money either way, it doesn't really matter to them when the job is finished, because they are getting their money for hours put in either way.

If the development company is busy and working on multiple projects at once, they may have so much going on that coordinating a build and delivering it when promised becomes impossible.

Another thing, if you want X solution built, to combine with Y and resolve problem Z, developers may be aware that X+Y wont resolve Z, but they will build X and charge you for it anyway. Then you find out that Z isn't resolved, but hey, it's not their fault because you only asked them to build X. So, interrogate and confirm and explain the full scope of your problem, and make sure what you want done is what's needed to be done.

If you are going to hire a company, I'd recommend going through their portfolios and contacting anyone who they have worked for before, and making sure they are not a bunch of cowboys.

As I'm saying this, I just want to say that there are great and honest web developers out there. But there are definately those who will mess you around and not really care about the true resolve of your solution.

-Cian

[/ QUOTE ]

This is very interesting to hear from the receiving end. I'm a web developer who's worked on everything from one page websites to $10 million corporate projects with an AJAX front end. At many different places I've had to clean up after soooooo many horribly done jobs--both by internal employees who had no clue what they were doing--and by external shops that also had no idea what they were doing, and managed to rape the client in the process. It's hard to say which is worse to clean up after, generally the latter.

In my estimation you could do all the stuff you list above right and still have about a 50/50 chance of getting royally screwed. But at least that's down from maybe a 75% chance of disaster 5 years ago and a 95% chance 10 years ago.

[/ QUOTE ]

Hey,
Sounds like its even worse than I imagined! Would you have any further advice to add to my list?

Thanks
Cian