8 Misleading Claims People Often Make To Close a Deal

The other day I came across an interesting article that suggested a healthy dose of skepticism was essential when you’re watching television commercials that make claims for both prescription and non-prescription drugs.

It turns out a study published in the Journal of General Internal Medicine found that 66% of claims made in television drug commercials were either misleading or flat-out false.

Actually, before paying for anything, a little skepticism can often go a long way. After all, misleading claims aren’t limited to those who sell prescription drugs and other medicines. They’re also made by people who sell everything from dwellings to diamonds. Here are a few of the biggest examples:

1. “The housing market is booming. If you don’t buy now, you’ll be priced out of the market forever.”

The usual suspects: Shady real estate agents looking to make a quick sale.
Reality check: I fell for this back in the days when I was an impressionable twentysomething who thought all real estate agents look out for their clients’ best interest. That naivete led to one my biggest money mistakes ever. The truth is, like the ocean tides, the housing market rises and falls. If home prices are too rich for you now, don’t worry. Over the long run, most people discover that, eventually, homes become more affordable — either due to increased earning power, or because over-heated housing prices fall to more sustainable levels.

2. “Getting a  college degree is a no-brainer investment in your future.”

The usual suspects: College recruiters and well-meaning parents.
Reality check:   Over the past 30 years, the cost of a college education has risen more than 1000%, far outpacing the rate of inflation. That’s the biggest reason why college is no longer the surefire return on investment it used to be. It’s also why today, more than ever, college isn’t for everyone.

3. “What do you mean you can’t afford it? We’ll just lower the monthly payments!”

The usual suspects: Car salesmen, timeshare peddlers, real estate agents, mortgage brokers, mattress dealers and other folks who sell big-ticket items on commission.
Reality check: Go ahead and laugh, but lots of people fail to think about the extra financing costs that drive those lower payments. Consider the example of a $10,000 used-car loan with an interest rate of 6%. Sure, spreading out your payments from three to seven years would lower the monthly payments from $304 to $146; but all of those extra interest payments end up boosting the final vehicle price by $1319.

4. “Of course it’s a good deal — you’re buying in bulk!”

The usual suspects: Most everybody.
Reality check: Some things are better off being bought in smaller quantities. For example, most perishables, including things like brown rice and mayonnaise, are usually better off being purchased in smaller quantities.

5. “If you want your investments to outperform the market, you need to let a professional actively manage your money.”

The usual suspects: Mutual fund managers and other active-investing advocates.
Reality check: An extensive survey by Nerd Wallet found that fewer than 1 in 4 professional investors were able to beat the market over the past decade. In fact, according to Nerd Wallet, “The majority of people who paid a mutual fund manager to invest their assets over the past decade would have done better by simply investing in a passive index fund, typically at much lower cost.”  

6. “Two month’s salary is a reasonable amount to spend on an engagement ring.”

The usual suspects: DeBeers, jewelry store salesmen, and gold-digging girlfriends.
Reality check: Sorry ladies, but this is one of those financial old wives’ tales that is based upon a very successful marketing campaign by the De Beers diamond company. The size of an engagement ring should only depend upon what your man can reasonably afford – not his salary.

7. “We don’t have Coke, we’ve got Pepsi — but they’re the same thing.”

The usual suspects: Exasperated waiters, waitresses, and fast-food cashiers.
Reality check: Anybody who tries to convince you that Coke and Pepsi are interchangeable needs a new set of taste buds because there’s a big difference between the two colas. I know. This one seems rather petty, but I take my soft drinks seriously.

8. “You really should get an extended warranty for that.”

The usual suspects: Slick product salesmen who know-better — and many minimum-wage sales associates who don’t.
Reality check: As I’ve said many times, sometimes extended warranties actually do make sense. The trick, of course, is figuring out exactly when it’s advantageous to pull the trigger. Of course, sometimes that means taking a step back so you can discern fact from fiction.

Photo Credit: HarshLight



Comments

  1. 1

    says

    “I have another buyer who is ready to buy, so you’d better act fast.” The usual suspects: A lot of different types of sellers, including real estate agents. Reality check: it may or may not be true. But you shouldn’t feel pressured when it comes to a major purchase like a house.

  2. 3

    says

    Oh man, you’ve finished that off with my biggest pet hate. Extended warranty on products that are designed to last until after that date for products that you can afford to replace. Arrrrggghhhh!!

  3. 4

    says

    Number 3 is a pet peeve of mine. When you’re asked “how large a monthly payment can you afford?”, look out! This is a favorite tactic of car salespeople and realtors. The implication is if you have any uncommitted money in your monthly budget, then you’re not spending as much as you should!

    • 5

      Len Penzo says

      My dad sold cars for awhile to make extra money, Kurt. He finally quit because he couldn’t stand seeing unsuspecting people get ripped off. The stories he told me about getting people to stretch out their payments would make your head spin.

  4. 6

    says

    Well, you always need to be careful and think about all the aspects. People are in the business to sell, so, they’ll stop at (almost) nothing to do it. Really good advice.

  5. 11

    Fencedin says

    “What’s the most you can afford to spend for a house?” asked by realtors. You will always be shown houses that cost at least that much, and will never know if there are any cheaper homes available with the features you want. Not to mention that a realtor’s fiduciary duty is to the seller, not the buyers that they are driving around to look at houses (unless you specifically hire a buyer’s broker).

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