Why You Should Price Your Home Like Target

Each month, researchers at The University of Michigan survey a small sample of the U.S. population about their thoughts on the economy -- is it improving, it is worsening, is it staying the same.

May's consumer confidence survey registered it's lowest reading since 1980 -- and for good reason:

• Unemployment is spiking
• Gas prices are at an all-time high
• Housing markets keep getting bad press

But despite all of that, it appears that the American Consumer is taking the economy's hiccups in stride.

Last month, retailers around the country reported rising sales levels that doubled economists expectations. This isn't supposed to happen when consumer confidence is falling so fast.

But, a closer look shows that the retail sales data was led by discount retailers such as Target and Wal-Mart. In other words, consumers feel worse about the economy, so when they choose to spend money, they spend it on value items.

For home buyers, this should sound familiar because it's every real estate agent's mantra right now -- "there's a lot of good values to be had." It's why some homes are getting multiple offers within days while other languish on the market for months. And that's why I wrote a post a little while ago called "It's a Great Time to Buy Real Estate in Philadelphia". In our market in Pennsylvania and New Jersey, where prices are stable, and the amount of existing housing inventory is smaller then the national average, careful consideration of your pricing is crucial.

The housing market is showing signs of strength across the country, low consumer confidence notwithstanding. Every buyer is looking for a "good buy" and there's plenty of places to find them.

(Image Courtesy: Wall Street Journal Online)

Real Estate Definitions :PITI

Most homeowners make four housing-related payments each month:

1. Principal on a mortgage
2. Interest on a mortgage
3. Taxes on the real estate owned
4. Insurance for the real estate owned

Collectively, these payments are known by the acronym PITI but don't let it fool you -- a homeowner's monthly expenses are still called PITI even if one or more of the elements doesn't apply.

For example, a homeowner with an interest only mortgage does not pay principal each month. And some homeowner's are not required to pay Insurance or taxes into an escrow account if they are borrowing from a smaller lender or are making a larger down payment.

Additionally, condo owners typically don't pay homeowners insurance -- they pay a monthly assessment and/or maintenance fees to an association instead, and a smaller condominium specific policy insuring the interior elements of their condo and the contents.

In some instances the Insurance company ir taxing authority may send the annual bills directly to the homeowner instead of to the lender. If your lender is escrowing these items, the bills must be forwarded to them. Otherwise your escrow account will accumulate, and you will, in effect be doubling your cost. Eventually it will be reconciled, but typically your money will have been held without interest during that time.

But regardless for what it stands, determining a comfortable PITI should be every homeowner's starting point when looking for a new home. PITI is the monthly housing cost, after all, and by knowing what fits in your budget, it's a lot easier to compare homes and their related expenses.

It's certainly better than asking the bank "how much home can I afford" -- all that's going to tell you is the P and the I. As a homeowner, you need to know all four.

PITI is most commonly pronounced pee-eye-tee-eye.

(Image courtesy: Contractor-Books.com)

An Open Letter Re: My New Fortune

I just got an email with the subject line Preferred Partner. Since I belong to a number of associations with affiliate groups, I actually opened and found this;

Ogechi Promise
From Ogechi Promise
Rue de Dulie 7th Avenue Plot 41 Williams Ville

Dear Prefered Partner

l am an orphan having $16,800,000 USD with a private trust company for safe keeping. I am willing to offer you 10% of the total fund if you can assist me transfer this fund to your country or any bank of your wish. I wish to invest in a stable economy. My interest is in companies with potentials for rapid growth in long terms.

I am interested in placing my fund in your country, if your country's bi-laws allow foreign investment. You can contact me for more details via my e-mail address with your reference. This fund I inherited from my late father who excels as a government contractor till his death by the rebels in 2006 in here in the country capital while I lost my mother at my early age of 2yrs this made me the only child of the family. Don't fail to indicate interest by furnishing me with your private details phone, fax, address, occupation and age.

Yours faithfully,
Ogechi Promise

I understand that even Scam artistes need to make a living. And the whole Nigerian Scam , or huge lottery letters seem to be sort of a "cottage industry" for email con artists But I think this has to stop. This letter is a new low for the entire Scamming Industry.

What happened to the Robert Redford and Paul Newman type of scam we all felt so warm about in the classic movie "The Sting"? If you want my money, can't you at least pretend that I'm smarter then a slug? Make it confusing enough so that I have to go to Snopes to check it out or read the Scambusters newsletter to find the newest in creative Internet theft? So that it is understood that I am not asking the impossible, I refer you to the classic letter known as Son of Spam. This is a standard to reach for.

Look, I am a well informed consumer, I don't open emails from people I don't know with strange attachments. I don't click on links in strange emails because I am familiar with the concept of "phishing", so if you want my money, you will need to work a little harder.

I look forward to a higher level of service in the future. If you're going to lie to me or try to entrap me , at least be clever about it. Thank you in advance for your attention to this matter .

Why I love the Internet

Bubble Wrap.
Who doesn't love it? Click Here to see why.
Just something for a Silly Saturday! Enjoy - I like the Manic Mode personally

Or here's a challenge from Bored.com I finished all 12 levels - DO I have too much spare time?
Let me know how you make out -

They Call Him Flipper...

Flipper mailbox by Sheeshoo

No, its not about our favorite Dolphin friend, its about helping lenders get REO properties off their books.

Investors have long been a staple of the REO market, and professional investorsoften bought, remodeled and sold properties for a profit. The sale price to the consumer from the investor would generally be higher since the repairs or remodeling of the property actually increased the value of the property. The difference between the cost of the repairs and the increase in value was known as an entrepenuerial return.

When the market heated up some buyers bought property to re-sell to other less informed buyers for higher prices, and in some instances created ladder schemes where a group of individuals sold a single property to a sequence of fictitious purchasers, each time for a higher price until the final buyer just walked away from a mortgage that was well in excess of the value of the property. To stop this fraudulent practice, FHA established a 90 day waiting period on resales five years ago. This however had the unintended consequence of limiting the buyers available to lenders who were selling REO properties since they would usually try to resell the property as quickly as possible after the foreclosure.

With the change in the real estate market, the record number of foreclosures in many parts of the country , and the smaller pool of available financing, FHA is reversing their policies to help lenders get REO properties off their books. They recently announced that they were lifting their 90-day waiting period on resales (see Inman News story). This will help investors in their resale efforts, since the properties are usually completely remodeled, and would easily pass such restrictions, but lenders may still face some challenges on these properties.

If a property has minor deterioration, minor repairs might meet the FHA repair standards if the house is safe clean and sound. If the property needs substantial repair the lender will have to choose between selling the property to an investor or buyer with conventional financing and making repairs to the property. Since lenders are interested in making as rapid a sale as possible, and in a cost efficient manner, they may wish to makeminor repairs to meet lender requirements, or completely rehab a property to reach a broader buying audience and achieve a higher sale price.

It will take some time to see which participants in these transactions benefit most from this change - lenders, investors, or the end buyers., but without question this change is a move in the right direction, and is probably only one of many changes we can anticipate as the mortgage and real estate industries work their way through the current market.