Auto resource guide

Tips for better road trips—including how to stay safe, make your clients comfortable, and keep more money in your pocket.

by Ward Lowe and Marty Kramer   Some agents spend as much time behind the wheel as they do at a desk. If you’re logging mile after mile in your car ...

Know who’s riding shotgun

With all the time you spend in your vehicle, safety should be a primary concern. Of the 604 Texas REALTORS® participating in an informal Inside Track Internet poll, more than half reported that they drive clients when they visit homes. That’s a lot of agents inviting a lot of strangers into their cars.

One way to protect yourself from these strangers is to make them less strange—get to know them better. Gather as much information on prospects as possible during your first contact with them and double-check their information. There are many Web resources, both free and fee-based, where you can verify names, phone numbers, and addresses. One Texas REALTOR® subscribes to public-records Web sites that allow him to double-check clients’ information by entering their license plate numbers.

While the Internet can be a wonderful information-gathering tool, remember that it’s also fallible. Don’t panic if your search turns up another address or different phone number for a client. People move—that’s what keeps you in business—and Web directories take time to update. If your information greatly differs from a prospect’s, ask him a few more questions. Or, when it comes time for the appointment, make it apparent to the prospect that several people know where you’re going and with whom.

Take a page from the Boy Scouts: be prepared

Being safe and prepared means more than knowing who your client is. It also involves being ready for car trouble. A flat tire or dead battery can turn a routine appointment into a nightmare, especially with a client as a passenger. Being ready for car trouble not only makes your life easier, but might win you points in your clients’ eyes.

You can’t prepare for every possible emergency—spare engine parts can be bulky. However, take the time to stash the following items in your trunk; you’ll be glad you did if you ever break down in the middle of nowhere:

• Flashlight with extra batteries
• Work gloves
• Rubber bands and duct tape for emergency hose repairs
• Screwdriver, hammer, wrench, and pliers
• Blanket
• Small throw rug or old shower curtain for ground covering
• Jumper cables
• Fire extinguisher
• Basic first-aid kit
• Bottled water and non-perishable food (e.g., dried fruit or nuts) in case you get stranded
• Shovel
• Flares
• Tire-repair kit and emergency air pump
• Cigarette lighter

Pay attention to the little things

When clients spend a significant amount of their time with you in your car, you want them to be comfortable. It’s unlikely that you’ll install recliners in the back seat or offer fine dining, but you can provide a few extras to enhance their enjoyment of rides with you.

On sunny days, make sure to toss extra sunglasses into your glove compartment. A squinting homebuyer is not a happy homebuyer. Sun shades that attach to the side windows with suction cups also can provide relief from sun and heat. A few large umbrellas and plastic ponchos in your trunk come in handy when dark clouds roll in.

Always carry a small first-aid kit. Be sure it includes Band-Aids for foot blisters, tissues for allergy season, and aspirin or ibuprofen.

Some agents throw a small cooler in the back seat stocked with water, soft drinks, or other beverages. You might want to provide a bag containing some fruit, pretzels, or other snacks, especially if you’re going to be on the road for a long time.

Are you showing the house to a family with kids? A coloring book with crayons or similar amusements for the youngsters could make the trip more enjoyable for everyone.

Stocking your car with all these things at once probably would leave no place for clients to sit. Keep a duffel bag at your office filled with some of these items and grab what you need when you need them. Use your own experiences to add to the bag. Little things do make a big difference in customer-oriented businesses. Keep your clients happy and provide them with more service than they expect.

Negotiate your best deal (The art of haggling)

Negotiating is what you do. You don’t need help getting the best bargain at the car dealership, right? Maybe you should ask yourself this: If a car salesman wanted to negotiate a home purchase using his knowledge of automobile transactions, how do you think he would do? Maybe you could use a few pointers after all.

To put yourself in the strongest position, you can use your knowledge of negotiating along with some of the following advice to walk out of the showroom with what you want at the best possible terms.

Keep separate transactions separate

Many people do their homework and bargain hard to get the lowest price on a new car, then turn around and trade in their old car with little or no forethought. Do that and every advantage you gained on the price of the new car will be lost. The same is true with financing.

One strategy is to negotiate the price of the new car before even discussing the possibility of a trade-in or financing. Tell the salesperson you will discuss those items after you agree on the price. Other experts advise agreeing to (and getting in writing) the value of your trade-in before negotiating the price of the new car. Either way, get a firm commitment before moving on to the next step. Even better, sell your old car yourself. If you have the time and patience, you almost certainly will come out ahead.

Know your stuff and don’t tip your hand

Like real estate negotiations, the more you know about the other side and the less you reveal about your position, the stronger your leverage. So, telling the salesman, "I have to have this car," or "I can afford a $450 car payment," does little in your favor. On the other hand, knowing the dealer cost for the car (and the options on it) puts you in position to negotiate from there. The alternative—negotiating down from the sticker price—plays into the dealer’s favor.

You should also line up (but don’t commit to) the best financing you can find from an outside source before discussing a loan with the dealer. Then, your financing negotiation becomes simple: If you can beat this, I’ll finance with you.

A car salesman does not want you to leave the dealership. The reason should be obvious: You can’t buy a car from him if you are somewhere else. Use this information to your advantage. Be willing to walk away—even if the keys are almost in your grasp—if you ever feel you are being treated unfairly. Unlike a real estate transaction, you probably can find the same exact item elsewhere. In some situations, making a move toward the door is necessary to get a concession you want. Again, be prepared to keep walking if necessary.

You also often get a better deal when you tell a salesman you are a ready-and-willing buyer … but only if you can get the terms you’re looking for. It’s the bird-in-the-hand concept.

When does a 1.9% loan cost more than a 7% loan?

If you’re willing to pay cash for a car, should you expect a discount? No. In fact, if the dealership knows up front you plan to pay cash, they may bargain even harder to make more money on the car, since they won’t see any profit from financing charges.

You also should exercise caution when comparing financing. If the dealership says they can beat your 7% loan with a 1.9% loan, make sure it’s not an either/or incentive. That is, 1.9% financing or $1,500 cash back. If so, it’s time to get out your calculator to figure out the true costs for comparison. It’s quite possible you’re better off taking the $1,500 and financing the rest elsewhere at the "higher" rate.

If all this sounds like more than you want to deal with, there are services and brokers who will negotiate a new-car purchase for you. Sound familiar?

Get the most green from your machine

Tax write-offs

If you drive for business purposes and don’t deduct any auto expenses from your taxes, you’re losing money. Two basic methods exist for writing off auto expenses: the standard mileage rate and actual expenses. According to IRS Publication 463, if you want to use the standard mileage rate for a car you own, you must choose that method the first year the car is available for use in your business. In later years, you can stay with the standard mileage rate or switch to actual expenses. For leased cars, if you want to use the standard mileage rate, you must do so for the entire lease period.

The standard mileage rate for business miles has been increased for 2001 to 34.5 cents per mile. If you use the standard mileage rate for a year, you can’t deduct actual car expenses for that year.

The actual-expense method allows you to deduct depreciation, gas, insurance, repairs, lease payments, and a few other items. Keep in mind, though, that if you also drive your car for non-business uses, you must determine the percentage of your business miles and multiply that by your expenses.

Other tax-savings options exist, and you most likely will need the advice of a tax expert or plenty of time, IRS publications, and a calculator.

What makes more sense—leasing or buying?

The lease-vs.-buy decision requires careful consideration of many factors. Here are a few major differences to take into account:

• With a lease, you typically get a lower monthly payment for an identical car. However, after the term of the lease expires, you must either pay to keep the car or lease a new one. People planning to keep their cars for more than four years generally come out ahead when they buy.
• Most leases limit your annual mileage to 12,000 - 15,000 miles. You can sometimes negotiate more miles up front for an additional fee. Otherwise, you pay a per-mile charge that can add up quickly.
• In many instances, there are more tax breaks for leasing a car than buying one.
• Insurance is often higher on a leased car, since the leasing company may require more insurance or lower deductibles than you might choose on your own.
• You are charged for "excess wear and tear" on a leased vehicle. Make sure you have a detailed definition for what constitutes excess wear and tear.
• Leasing a car may free up money that you can use to invest or put into your business.

You can find several car-leasing calculators, including one that helps you evaluate a buy-lease decision with potential investments thrown into the mix, at www.smartmoney.com/autos/leasing.

A final consideration: Some people who would bargain to the last penny on a car purchase think that a lease is not negotiable. Not true. You can save thousands of dollars by learning about the components of a lease and negotiating favorable terms.

Photo © PictureQuest.

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