Dealer Fees, Stealer Fees (Private Party Sale!)

"Mandatory" dealer fees are the latest scam.

A friend of mine wants to buy a used car and asked me to help him out.  He is looking for the second generation of the "new" VW Beetle, which was made from 2011 to 2019, and we're looking for a later model one with under 40K miles.  Great, a fucking unicorn!  But not as rare as it might seem.

Even though the second generation "new" Beetle was redesigned for a more masculine look, it seems to have been more popular with women, particularly elderly women.  Within a 500 mile radius of my home, I was able to find about 20 examples, mostly in Florida.

We were camping in Florida and went to see one at a local Subaru dealer.  Advertised for $22,500 with 15,000 miles on the clock, it was, according to Edmunds, KBB, and NADAguides, a little overpriced.   But as it turns out, that price was the bait-and-switch price.

Since CoVid, dealers feel they can screw their customers mercilessly.  That's about to end, as consumers' pockets are emptying out.  One gag is to claim there is a "mandatory" dealer fee of $599, $999, or even $1499 that has to be paid in addition to the purchase price.

In this case, it was a $999 fee, which means the overpriced $22,500 Volkswagen is now an overpriced $23,499 Volkswagen.  "But our price is competitive!" they argue.   "But it is $23,499 with the fee!" I replied.  "No, that's not part of the price, that's a fee!" they illogically argue.  I guess they figure since half the country voted for Trump that everyone must be a moron.

But wait, it got worse - far worse.  The overall sales price jumped to over thirty grand by adding a "reconditioning fee" of $3000 (for a car that arrived in inventory the night before) as well as an "inspection fee" of $750.  It was downright insulting.  Was this because we were gay and perceived as clueless?

The only weapon you have in negotiation is to walk away so we did.  The next day, they lowered the "list" price - by $500.   The problem is, if you pay $25,000 or $30,000 for a car that has a market value of $20,000, well, the day after you bought it, you just set fire to $5000 to $10,000 for no reason whatsoever.

By the way, when I asked about the "reconditioning fee" he said that was to replace the tires.  Some expensive tires!  He had a mechanic look at them and that was a bad idea.  Even the mechanic was mystified as to why a car with 15K on the clock had nearly bald tires.  Dry rot, you expect, but worn out tread?

The more I looked at the carfax (which showed it in dealer inventory for nearly two years in Michigan before being "sold" to a dealer in Miami) the more it seemed there was a "story" here.  Used as a parts-getter with the odo turned off?  (some manufactures supply cars to dealers with a removable tab which can be used to "turn on" the odometer at time of sale).

Then there was the minor accident damage which, upon closer inspection, seemed more major - and badly repaired.  Urethane bumpers require a special elastomer in the paint and this one was already starting to chip.

Granted, low-mile cars have their own share of issues, like rotted tires and dead batteries.  But this was starting to look less and less like a low-mile car.  I'm glad we walked.

The best deals are from individual sellers - private party sale.  Harder to come by in this day and age as dealers have gone out of their way to make it hard to sell via private party sale.  The local grocery store where we lived in Virginia was threatened with a lawsuit by the local used care dealer association, as local residents were putting their "for sale" cars in the parking lot.  Their argument was that, if more than three cars had a for sale sign on them, the grocery store needed a used car dealer license.  Bullshit?  You bet.  But the grocery store backed down and put up signs threatening to tow cars away.

In addition to avoiding "dealer fees" and "reconditioning fees" and "inspection fees" there are also tag and title fees that can be avoided.  You can't avoid sales tax and registration fees (7% title fee here in Georgia) but the dealer wanted $599 for their "paperwork processing fee" and another $399 for an outside tag-and-title service to obtain title and tags.  These are both things you can do for free with a trip to your local DMV.  So that's another $999 in savings.

The good news is, we found at least two private party sale cars with low mileage, both belonging to elderly women who lost their licenses. One is orange!  Complete service records, oil change history, etc.  And we're going to look at the orange one tomorrow.  Price?  $18,000 to $20,000 (asking).  A far cry from thirty grand!  And no Takata airbag recall! (VW has stalled on this, claiming there are no parts available to fix the problem - aging airbags may go off spontaneously and blow your head off - charming!).

No one weeps when a car dealer goes bust or a used car salesman does the honorable thing by putting his head next to a Takata airbag and driving gently into a brick wall.

I don't deny a car dealer a fair profit, but tacking on ten grand to a twenty grand car?  Fuck that - and fuck them!

UPDATE:  When we bought our last two cars (the Hamster and the King Ranch) we negotiated the price over the phone or via text (same for the Nissan).  No hassle, no hidden charges.  There are good dealers out there - or were.  I think CoVid and Trumpism have destroyed people's  minds and created this "what's in it for ME?" mentality.  Also a new generation  has come of age with apparently no fiscal skills.  We have 20-year-olds going bankrupt on student loans, sports betting, Bitcoin, or options trading.

More on that, later.

Capital Gains Tax and the Installment Provision

When someone unilaterally alters the terms of a deal, walk away!

We sold the condo - or will be selling it shortly.  We had a lot of showings in the first two weeks - at least a dozen or more.  One problem in selling the place is financing. Since the majority of units are now owned by investors, Fannie Mae financing is not available.  It's either a VA loan or cash sales - and that limits your buyer pool.   As I have discussed ad nauseam here in the past, the value of Real Estate (or anything) is determined by supply and demand, and if the demand pool shrinks, so do prices.

We listed it at $165,000 which is in line with other recent sales for admittedly nicer appointed units.  That is still very cheap for walk-to-Metro in the DC area.  We got one offer for $145 with $115,000 cash down and asking us to "take back" a $30,000 note.  Since I bought 917 Duke Street with a similar arrangement back in 1994, I was receptive to the offer and asked them to put it in writing.

The offer came back at $135,000 (with no explanation) and putting $100,000 down and asking us to finance $35,000 over three years at one percent for some reason.  We countered at $140,000 with the note at 6% and they ghosted us.  All for the best, anyway, as the next day we got an all-cash offer, no contingencies, at $150,000.   Sold!

I ran into a similar thing with Duke Street.  I had listed the place for rent and an insurance agent (Boo! Hiss!) called me and said he wanted to buy the place for $640,000.  I was not on the market to sell, but was open to the offer.  He put together a written offer that changed, subtly, several terms of his verbal offer.  One change was that he wanted (verbally) to have 15 days to inspect the property and do an "economic analysis".  I agreed, only to be chagrinned to see he wrote the contract (which he typed up himself - a first warning sign) to read fifteen business days which is nearly a month.

Not surprisingly, his "inspection" claimed the building was riddled with defects, but out of the kindness of his heart, he would give me $400,000 for it as an act of charity.  I realized he was a time-waster and moved on and rented the place for another year and sold it for $680,000 with no contingencies.  Today it is once again a residence, as the market for office space has evaporated over time.  But it was an interesting lesson to be learned.

And the lessons are many.  When people try to "sneak" in changes in a contract, watch out.  A contact is a "meeting of the minds" not a game of "gotcha."  And when (as he did) you represent a written contract as encompassing the terms discussed verbally and via e-mail, but instead sneak in changes, well, that's pretty much fraud.  Just walk away from people like that.

The other thing is that, while home inspections can be useful to a buyer (particularly a first-time buyer) in deciding whether or not to buy, some buyers think they are a cudgel to be used to cram down the price on a home by getting a friendly home inspector to find "defects" in the property.  They will then try to threaten you by arguing that if you don't sell to them you are obligated to disclose these alleged "defects" to anyone else looking to buy the property.  It is a shady way of low-balling people and in the commercial or investor class of real estate, it isn't done much.  But it is used against amateur sellers all the time, so seller beware!

When I told the insurance agent (buyer) to piss-off, he started screaming at me on the phone.  He thought I was desperate to sell or something and that by tying up the property for nearly a month he would catch me in a cash-crunch.   I should have seen the signs early on.   But I learned from the experience.

But now on to today's topic - the installment provision of the tax code!  One problem with making money is that you have to pay taxes on it.  And paying taxes is only fair - up to a point - but getting socked with a big tax bill all at once isn't fair at all.  And the tax code assumes your income is steady, so when you get a one-time windfall, they assume this is your new normal and tax you accordingly.  Hourly workers notice this when working overtime - the withholding jumps up because Uncle Sam assumes this is your new norm.

So, for example, we sell this condo for $150,000.  Since the property was fully depreciated ages ago, our capital gains are easy to calculate - the entire sales price is a capital gain.  Problem is, we live on about $40K-$50K a year in 401(k) savings (no debt!) so that would put our income at $200,000 a year, which means we are boosted into a much higher bracket.  Fortunately, I was able to move the closing date to January, so the income will be taxable in 2025, not 2024.

Still, even then, it is problematic.  In addition to paying the capital gains taxes, we also will lose our Obamacare subsidy (nearly $20K!) or have to pay it back.  Again, the government (whose employees receive regular checks) assumes that a one-time blip in your income is a new norm and should be taxed accordingly.

One way around this is to spread the gains over a number of years (which the IRS forces you to do with passive losses!) through the installment provision.  Take back a mortgage on the property and receive monthly mortgage payments.  You get paid interest (ordinary income) as well as principle (capital gains) but your tax burden is spread out over a number of years.

There are other advantages as well.  For example, by offering owner financing, you may increase the size of the pool of buyers, which means you can ask a higher price.  In terms of an "investment" it is pretty sound, as the debt is backed by the property and if the tenant buyer stops paying, you can foreclose, take the property back and sell it again to someone else.  It's like being a landlord without having to unclog toilets.  Just make sure the down payment is enough to cover potential foreclosure costs, should the need arise.

But in our case, we decided to take the cash offer.  And some would be quick to note that long-term capital gains are taxed at relatively favorable rates.  However, if you have short-term gains (such as in house-flipping) they may be taxed as ordinary income.  Moreover, if you are selling a property over a half-million or so (see chart below) the rate may jump to 20% - which makes the installment provision look attractive.

Note also the 0% rate for gains under about fifty grand.  This makes a three year installment note of 50K a year look attractive!

For us, it is the Obamacare subsidy which is the issue. It amounts to nearly half our annual income and thus would really screw us in terms of accelerating the depletion of our 401(k) balance.   Punting this gain to 2025 at least lessens that impact as I am going on Medicare in March, and that just leaves Mark on ACA, which should cut our premiums (and thus subsidies) in half.

After taxes and payback of ACA subsidies, however, there will be barely enough to live on for more than a year or so.  Sad math!  But it is time to downsize, and the condo was becoming a break-even proposition, starting several years ago.

Next Up: Is it time to look at retirement communities?  Perhaps.

Tax rate	Single	Married filing jointly	Married filing separately	Head of household
0%	$0 to $47,025	$0 to $94,050	$0 to $47,025	$0 to $63,000
15%	$47,026 to $518,900	$94,051 to $583,750	$47,026 to $291,850	$63,001 to $551,350
20%	$518,901 or more	$583,751 or more	$291,851 or more	$551,351 or more

  

Who's Training Who? (The Perils Of Voice Recognition)

Is the machine serving us, or vice-versa?

A reader writes, suggesting I use voice recognition to dictate blog entries.  It is a good idea and I have used it in the past.  You can tell the voice recognition entries, as they tend to be verbose and long and sometimes have awkward phrasing.  This one is typed, and probably suffers from the same problems.

I tried one of the first voice recognition programs, Dragon NaturallySpeaking back in the 1990s.  It was kind of a hot mess.   As I recall, you had to "train" it with sample sounds, and even then, well, the results varied from frustrating to amusing.  I gave up rather quickly.

Still, it was an amazing thing.  As a kid, my Math teacher had this "crazy" idea that 7th graders could learn computer programming - normally a special elective reserved only for the smartest High School Seniors.  Come to think of it, in 2nd grade, they taught us set theory and Boolean Algebra as part of the "New Math" curriculum.  I could have been Bill Gates!

Problem was, back then, software was considered "Liberal Arts" and a trivial pursuit.  Colleges didn't recognize it as "science" and neither did the Patent Office.  Maybe that is why so many tech Billionaires are college dropouts.  Not everything there is to learn is taught in school.  In fact, nothing new is learned by memorizing the old.  But I digress.

Back then, of course, it was the 1970s and we sat around all day long getting high and drinking beers (at age 15, act shocked) and when passing the bong would say things like, "Hey man, wouldn't it be cool if someday you could just talk to a computer and it would talk back to you?"  And a friend would reply, "Far out, man!  Maybe someday they'll make a computer small enough to fit in a suitcase!"  "No way, man!"  I remember having a vision, at age 16, while high, about artificial intelligence - something about language models or something, I forget.  It evaporated as quickly as it appeared.

We had no idea how prescient our marijuana-fueled fever-dreams would be, and how soon they would come true, and how timid our expectations were.  Today, a cell phone fits in the palm of your hand and does all these things and more - and stores a library of information as well.  I have over 10,000 songs stored on my cell phone, along with a library of a thousand books.  For a guy raised on 20MB hard drives, who had to solder in DIP chips of memory, one Kbyte at a time, well, it seems unreal.

And yea, voice recognition has come a long way.  But it also hasn't.  One reason I am loathe to use it - in addition to the verbosity problem - is the manual corrections that need to be made.  And these corrections are as painful (in my case, literally) as typing new text.  Speaking of which, I have about 20 minutes until the Tylenol wears off, so I'd better damn well get to the point.

Google Voice has problems with homonyms.  They're, Their, and There are indistinguishable to voice recognition software, as are You're and Your.  Not long ago, posting something online and using the wrong your or you're would generate a litany of pedantic complaints along the lines of, "It's spelled you're, dumbass, buy a dictionary!"  But today, I see less and less of that, as everyone just assumes you are using voice recognition.  In automotive discussion groups, confusion of "breaks" for "brakes" isn't even commented on anymore.  Everyone knows what you meant.

Which raises an ugly point: Are we training the machines or are they training us?  Because I notice already that I tend to avoid contractions when using voice recognition to as to avoid the You're/Your or the They're/Their dichotomies.  So my voice recognition "writing" tends to be more formal, with "You are" or "They are" instead of their contracted counterparts (which save one ASCII character each!).

(I think also that people are accepting these alternative spellings and they may supplant the real deal in a decade or two.  The online brochure for your new SUV will describe the four-wheel anti-lock disc breaks and no one will bat an eye.  The Oxford English Dictionary will list "brakes" as an archaic spelling).

But beyond that, I find myself talking differently as well.  Apparently, according to voice recognition, I have several speech impediments, so I have to pronounce words more carefully.  Funny thing, though, when it comes to punctuation, Google Voice recognizes period, comma, exclamation point, and question mark, as actual punctuation, but cannot understand "quote" or "quotation mark" for the life of me.  Moreover, sometimes it reverts to spelling out those words, instead, for no apparent reason.

I wonder if perhaps voice recognition is training us to talk in a certain, stilted, accent-free manner, to the point where, a decade from now, the sound of our very voices will be unrecognizable to the people  of today.  We adapt to the machine, not vice-versa.  And if you need evidence of this, look no further to your smart phone, which you are likely hunched over as we speak (Are we speaking? Why is that a phrase?).  And consider how "Social Media" has changed how people actually think - and how it has swayed elections and overturned governments.  We are slaves to the machine.

Of course, it might not end up that way (or has it already?). A few lines of code could be inserted to use text context to determine whether you meant to say, "You're breaks are bad" or not.  Maybe "AI" will fix this, maybe not.   The results of Google searches using AI are laughable and inexcusably wrong - for no apparent reason, it seems, other than to mess with our minds.  Maybe that is the point.

The Tylenol is wearing off and my error rate is skyrocketing, so I guess I am done for today.  Not verbose, though, eh?  Take that, Google Voice!

The New 2025 CoVids Are Here!

Trump is back and so is CoVid!  Like a bad penny!

I haven't posted regularly for a number of reasons.  Health is one of them.  My rotator cuff apparently needs surgery and that will have to wait until the latter half of 2025 at least.   If I use the computer, my arm starts to ache and then I feel spikes of pain in my shoulder and then, after a while, my right arm feels like it is on fire.  I never did like the mouse and I wonder whether 30 years of mousing was in fact, the problem.

I could type up a storm in the days of WordPerfect and DOS - no mouse to interrupt the keyboard flow.  Back then I could do 100 WPM with few errors.  With a mouse, well, that drops it to 60 WPM - so much for Windows "productivity."  Today, I am lucky to hit 15 WPM with a lot of typos - perhaps a combination of my shoulder injury and early dementia.

Oh, well.

I also got the Covid - again.  A friend recently traveled to Canada by plane and came back hacking and coughing.  She and Mark spent a week setting up the Merry Artists show and he started hacking and coughing.  A few days later, so did I.  I felt like crap, just like the last time - with searing headaches (no doubt more "white spots" on the brain) and a general feeling of malaise.

My doctor claims the new variant of Covid is not as bad as the old one.  We'll see.  Bad time to appoint anti-vaxxers to government health agencies, doya think?

Anyway, I have my new passport and reservations are in place.  Repositioning cruise to Barcelona from Ft. Lauderdale (by way of Gibraltar and Lisbon), six weeks in a rented camper on the Iberian pennisula, and then another repositioning cruise back to New Orleans.  I may never come back!

Invest $500,000 in Portugal and you get the "Golden Passport" - 10-year residency and free to travel in the EU, plus a path to citizenship!  It's an option.

Gotta go - arm's on fire!

Let's All Do The Same Thing At The Same Time Every Year!

You have choices in life, whether you realize it or not!

It is the "Holiday Season" again and everyone is miserable.  I am reading online, tales of woe from people who "have to go to Mom and Dad's house" for Thanksgiving and they find the whole experience boring at best, horrific at worst.  Either they sit around eating for three days, or go shopping on one of the worst shopping days of the year.  If they are particularly unlucky, the asshole Uncle chides them for not supporting Trump.

Family, what's not to like?

I find it hilarious that people say "I have to go" when they don't.  If you are a kid, even a college kid, I guess you have no choice.  But as a grown adult, with children of your own,  you can have your own Thanksgiving - or no Thanksgiving (Oh! Scary!) if you want to.  Like most of the rest of the world (the vast majority in fact) it can be just another day.  You have choices and being miserable is a choice in many cases, but most people either can't see that or don't want to, as they want something to complain about.

Mark is exhausted from a weeklong effort to set up the Merry Artists show.  Over 6,000 works of art and crafts!  He's done (with an army of volunteers) enough Christmas decorating to do a dozen homes.  So we won't be going overboard at our house this year. And after all that effort, we turned down invites for Thanksgiving from friends.   It worked out for the best - Mark also has a bad cold.

But what about family?  Most are dead, others live far away.   No, I am not buying a plane ticket on one of the busiest days of the year to visit a long-lost relative.  It's OK to say "no" to society's traditions.

Besides, Thanksgiving blows.  Overeating and football - I guess that is America in a nutshell.

But what does Thanksgiving really celebrate?  Sure, it honors the beginning of the genocide of the Native Americans. But it also celebrates our puritanical roots.  Remember, these "Puritans" would begat the same folks, who, not so many years later, would hang witches.  We've been trying to live that down ever since.

Yea, yea, tradition.  Our "Heritage."  But it's OK to move beyond heritage, particularly when it celebrates bad things.  Some Germans still celebrate Hitler's birthday - that's wrong.  Celebrating Puritans landing on Plymouth Rock is equally as bad.  It's not like they were the first to colonize America, either.  As Cole Porter put it, such a shame Plymouth Rock didn't land on them!

Of course, if you love turkey and football, go for it.  I'm not stopping you.  But it is a choice and you can;t bitch about how boring it is or how you hate the Black Friday crowds.  You can't complain about the choices you make.

Myself, I spent Thanksgiving working on the Buggy.  Still, the steering is shot and the brakes are iffy.  But it still runs, I guess,.