A Vulture Consumer? Good for You

July 2, 2009 by  
Filed under Tough Love Stories

vulture_consumerI was amused by the title of this article about vulture consumers. Apparently to some, a person who gets a bargain offered by someone in dire financial straits is a “vulture.”  Sorry – but Mr. ToughMoneyLove doesn’t agree with the negative connotation.

The examples given of vulture consumerism include homes bought out of foreclosure and an X-Box seller trying to pay a family member’s electric bill.  Welcome to the world of financial give and take, ebb and flow, winning and losing. Can it be helped? Nope. Unless and until we have an economy that is built like Lake Wobegon – where everyone is above average – some consumers will get better deals arising from tough times being experienced by others.

Last year when everyone was writing and whining about how the drop in home values was hurting everyone, I disagreed. Families that could not otherwise afford to buy a home could now do so because prices had come down to meet their income levels. The neediest buyers could participate by finding and buying foreclosed properties. Good for them. By waiting until conditions made sense for them, they achieved success. That the seller’s hardship may have contributed to the buyer’s success does not and should not diminish the buyer’s achievement. Unless you personally inflicted the financial hard times on the eager seller, why should you or anyone else question the ethics of the deal?

Should those of us who experienced severe losses in our retirement porfolios criticize the ethics of new investors who are buying our stocks at 30% more discounts from what we paid? I don’t think so. I’m not happy about that development but my job is to do a better job of planning and insulating myself from the impact of changing economic decisions. Crying “foul” on the discount buyers doesn’t advance any worthwhile agenda.

So if someone calls you a “vulture consumer” for getting a bargain in a down economy, wear the label proudly. You probably earned it.

Image credit:  law_keven

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8 Responses to “A Vulture Consumer? Good for You”
  1. lurker carl says:

    I’ve been a “vulture” consumer for years. We’ve bought “distressed” real estate when the markets drop and sold them when it recovered, keeping them as rental units until the appropriate time came. In the meantime, we bought repair and improvement materials for the rental properties as such companies fail and liquidate. We shop at bargin rooms, scratch ‘n dent outlets, junkyards and auctions for just about anything. Why is that shameful?

    We purchase almost all our vehicles from estate sales and bank reposessions. Good vehicles at bargin prices, all willingly sold by their owners to us. It doesn’t matter if the original owner died or lost their job or has to move 2000 miles away, someone else has to take that vehicle off their hands. I’m willing to do that, cash in hand. Should I be embarrassed?

    This is also how most successful businesses behave, buying up competitors for their desirable assets to create a better company at a bargin price. Look at the history of Jeep, it’s been owned by a variety of companies – Willys, Kaiser, AMC, Chrysler – they all have fallen on hard time, by the way, and sold it to the next company. Jeep has survived quite nicely over the years. Is that unethical as well?

    I do cringe at the predicaments folks have been in but their stuff still needs to be sold. But if I don’t buy it, someone else will. And that “someone else” will resell it to you at a hefty profit.

  2. Tom says:

    As I was in the process of buying my first home I met the home owner and he dropped the fact that he was in the middle of a divorce. Then, while touring the house, in the basement I saw a room filled wall to wall with bags of aluminum beer cans waiting to be recycled. It didn’t take a Sherlock Holmes to figure out how the owners came to the point where they had to sell.

    That night as my wife and I were discussing the price we would offer, I commented that our starting price just dropped by $5000 because of the obvious “need” of the owners to sell. My wife protested on the basis of “vulture consumerism” as you term it. But when pressed, she agreed that no, the owner’s self-inflicted “misfortune” (if you can even call it that) is not grounds for us making our own financial mistake; that is, paying more than necessary for a purchase.

    We got the house, and at a price my own agent couldn’t believe. I felt a bit bad for the owners, but not that bad. They were adults who made some unfortunate decisions that ended up costing them financially. Welcome to life-101.

  3. Matt_SF says:

    If vultures didn’t have a successful way of making a living, there wouldn’t be so many of them. One to think about!

  4. MasterPo says:

    While I feel for people in a bad state I must agree with you. One persons loss is someone else’s gain.

    I would hope the looser learns a lesson from their loss which is why I am NOT in favor of the gov bailing out all these over reached house owners.

  5. “…[A]s bargain-hunting “vulture consumers” scoop up everything from foreclosed homes to toys on eBay being sold by desperate parents, are we pawning our morals in the process?”

    To coin a phrase: HUH?

    Okay, so to behave ethically in a down market, we should ever-so-much NOT buy property from distressed sellers, right? Thus all those foreclosed and about-to-be foreclosed houses should sit on the market until they molder into the ground. Won’t THAT be good for the neighbors! And so fine for sellers desperate to unload the places for what they can get. But it will make us all feel righteous…

    Well, I may be an amoral scoundrel, but this old homeowner will be forever grateful to the series of vultures who bought the dump across the street, known for some years before its foreclosure as “Dave’s Used Car Lot, Marina, and Weed Arboretum.”

    First a bottom-feeder scraped it off the courthouse steps for an unholy low price. He hired a crew to clean out the mess and haul the junk, toxic chemicals, and weeds off to the dump. Then a speculator bought it from him. She renovated the kitchen and bathrooms, replastered the pool, repaired the HVAC unit and pool equipment, got rid of the collection of tin sheds in back, installed a watering system, cleaned up the landscaping, repaired the patio paving and roof, installed new flooring, painted over Dave’s avocado-and-eggplant decorating scheme, painted the exterior, and sold the place for a respectable approximation of the going rate in our area. The new owners, a pair of self-employed accountants, are so thrilled to have the place they actually are keeping it up.

    Please: send us some more vultures!

  6. Julie says:

    I do not think there is anything wrong with vulture consumerism with the BIG Exception of when the consumer enters into an agreement to purchase that necessitates a waiting period (e.g., a house purchase), then with the home off the market, other potential buyers turned away, the consumer extracts a last-minute price concession knowing that the seller, who very well could have gotten a better price from another buyer, will not refuse to make the concession because he/she needs the money quickly. I’ve read several personal interest news stories about this, which leads me to believe that this is happening quite alot nowadays. Entering into an agreement in Good Faith is a basic tenet of contract formation and to agree to buy a home at a certain price with the knowledge that you are going to force a lower price later on is downright unethical.

  7. Bret says:

    “Families that could not otherwise afford to buy a home could now do so because prices had come down to meet their income levels.”

    Thirteen years ago, this was us. We were very responsible with our money, but we were also single income. The best thing that ever happened to us was the plumetting home prices of the ’90s. Otherwise, we would have never been able to afford a house in the expensive area where we live.

    Take advantage of these cycles in the economy. Otherwise, you may be on the losing end of the transaction.

  8. Arsenal says:

    I agree with this. I do have a bit of an ethical problem with a similar animal, though:

    I’ve often recently heard financial ‘guru’ types talk about how they ‘called the housing crash’ – how their students and followers should trust them because they knew the housing crash was coming and got out the market at the peak.

    To this I say – Why should I trust you to tell me some enlightening financial advice when you sold millions in property to people over the past couple years without disclosing to them that you were doing so in order to lay what you considered inevitable losses on them?

    Basically, anyone who ‘boasts’ that they were able to get out of housing/stocks/etc at the peak is now just trying to sell me advice during an advice bubble, and I suspect the value of their advice is probably at peak value right now, only to decline in the coming months and years.

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