I often have a terrible time figuring out whether someone is being dishonest or is just stupid. Take buying a car at a dealership, refinancing your house, or anything else involving a lower-level salesman. They make absurd statements which benefit their cause if I believe them.
Last week, I was talking to a mortgage salesman affiliated with my financial advisor (who I think is pretty smart). The mortgages rates offered are about 0.25% lower
with a "point" (percentage of loan amount) paid up-front. One can compute the approximate () length of time the loan must be held for this to be a good deal. This guy, without any knowledge of how long I expected to stay in my home, said, "I never put people into points....you gotta pay all that money up front, you know?"
Was he being dishonest? I don't think his commission varied much depending on which product he sold me, and he seemed legitimately interested in forming a longer-term relationship rather than making a sale that day. When I mentioned that the point of indifference was probably around two and a half years and that I planned to stay in the house, he backed off of his claim.
I suspect he was just not .too sharp but perhaps realized that, when confronted with too many confusing mortgage choices, many people would just choose irrationally not to refinance. If someone chooses to buy nothing, he gets no commission. Maybe he was smart enough to want to reduce the number of choices for me to consider. And, when confronted with the need to cough up a percent of their homes' values, many people might back out of deals, so he decided to eliminate choices which might not pan out in his favor.
I have taken the adage "Never presume malevolence for what can be explained by stupidity." to heart and try to react in such situations with the presumption of stupidity. It's really hard though when I can't figure out how someone could actually believe the things he's saying. After all, shouldn't someone who spends his days selling mortgages understand the trade-off of paying a point down up-front for a lower rate?
() I don't know how the average person figures out which mortgage product is best. I have to put together a complicated NPV spreadsheet when deciding such things. And, even then, I'm not properly accounting for the interest rate options implicit in the products.
HN uses the asterisk to style text. Ideally, the parser would be smart enough to know you wouldn't be trying to italicize three paragraphs at a time, but as you can see, it isn't.
Hopefully you will check back within the edit window, in time to correct the mistake.
Most people don't enjoy hearing all of the factors involved in things they don't particularly care about. If they want to buy a computer, they'd much rather hear a recommendation (eg: Apple) or a very simple metric (eg: get >= 4GB of RAM) than how RAM, CPU, etc affect overall performance.
Hence, nowadays I give simple recommendations which work well on average. It's just easier - they don't get frustrated at me for lengthy explanations, and I don't get frustrated at them for not caring. But I'll definitely elaborate if they seem interested.
Comments
I often have a terrible time figuring out whether someone is being dishonest or is just stupid. Take buying a car at a dealership, refinancing your house, or anything else involving a lower-level salesman. They make absurd statements which benefit their cause if I believe them.
Last week, I was talking to a mortgage salesman affiliated with my financial advisor (who I think is pretty smart). The mortgages rates offered are about 0.25% lower with a "point" (percentage of loan amount) paid up-front. One can compute the approximate () length of time the loan must be held for this to be a good deal. This guy, without any knowledge of how long I expected to stay in my home, said, "I never put people into points....you gotta pay all that money up front, you know?"
Was he being dishonest? I don't think his commission varied much depending on which product he sold me, and he seemed legitimately interested in forming a longer-term relationship rather than making a sale that day. When I mentioned that the point of indifference was probably around two and a half years and that I planned to stay in the house, he backed off of his claim.
I suspect he was just not .too sharp but perhaps realized that, when confronted with too many confusing mortgage choices, many people would just choose irrationally not to refinance. If someone chooses to buy nothing, he gets no commission. Maybe he was smart enough to want to reduce the number of choices for me to consider. And, when confronted with the need to cough up a percent of their homes' values, many people might back out of deals, so he decided to eliminate choices which might not pan out in his favor.
I have taken the adage "Never presume malevolence for what can be explained by stupidity." to heart and try to react in such situations with the presumption of stupidity. It's really hard though when I can't figure out how someone could actually believe the things he's saying. After all, shouldn't someone who spends his days selling mortgages understand the trade-off of paying a point down up-front for a lower rate?
() I don't know how the average person figures out which mortgage product is best. I have to put together a complicated NPV spreadsheet when deciding such things. And, even then, I'm not properly accounting for the interest rate options implicit in the products.
HN uses the asterisk to style text. Ideally, the parser would be smart enough to know you wouldn't be trying to italicize three paragraphs at a time, but as you can see, it isn't.
Hopefully you will check back within the edit window, in time to correct the mistake.
Most people don't enjoy hearing all of the factors involved in things they don't particularly care about. If they want to buy a computer, they'd much rather hear a recommendation (eg: Apple) or a very simple metric (eg: get >= 4GB of RAM) than how RAM, CPU, etc affect overall performance.
Hence, nowadays I give simple recommendations which work well on average. It's just easier - they don't get frustrated at me for lengthy explanations, and I don't get frustrated at them for not caring. But I'll definitely elaborate if they seem interested.