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Real Estate and Home

Beginning in January 2014, the Consumer Financial Protection Bureau, or CFPB, issued new rules to protect mortgage borrowers. The rules deal primarily with what is known as the “servicing” side of the mortgage process. That’s everything that happens after a mortgage closes, from setting up escrows and crediting payments to foreclosures.

There are nine rules in all. Their purpose is to “provide homeowners and consumers shopping for a home mortgage with new rights and greater protection from harmful practices.” Let’s see what each one is about.

1. Periodic Billing Statements

Mortgage lenders must provide periodic statements to borrowers for each billing cycle. These should reflect information on payments currently due and previously made, fees imposed, transaction activity, application of past payments, contact information for the servicer and housing counselors , and, where applicable, information regarding delinquencies.

The periodic statement does not apply to fixed-rate mortgages, as long as the the servicer provides a coupon book. Also, the coupon book must contain certain information as specified in the rule and that information must be made available to the consumer.

2. Interest Rate Adjustment Notices for ARMS

If a loan is an adjustable rate mortgage (ARM), it contains provisions for periodic changes in the interest rate. If you have such a loan, the lender must provide you with written notice of a rate change between 210 and 240 days before the initial change is set to take place. They are then required to provide notice of subsequent rate and payment changes, between 60 and 120 days in advance of the change. The notice must include an estimate of both the new rate and the new payment.

3. Payment Crediting and Payoff Statements

Lenders must credit loan payments from borrowers as of the day of receipt. However, if a payment is received for less than the full amount, the payment may be held in a suspense account. When the amount in the suspense account covers a periodic payment, the servicer must apply the funds to the consumer’s account.

The lender is also required to deliver an accurate payoff balance to a consumer when requested. They have no later than seven business days from  receipt of a borrower’s written request to provide that information.

4. Force-place Insurance

In the past, lenders engaged in a practice known as force-place insurance. That was a practice in which the lender would get a homeowner’s insurance policy on the property securing the mortgage, if it believed that the borrowers had allowed their policy to lapse. This sometimes resulted in high-priced policies, which were then charged to the borrower.

Under the new rules, lenders are prohibited from charging a borrower for force-place insurance unless the lender has cause to believe the borrower has failed to maintain insurance. They must also provide the borrowers with required notices.

The lender must provide the borrower with written notice of the force-place policy at least 45 days before charging the borrower for the coverage. They must also provide a second notice at least 30 days after the first, and at least 15 days before charging the borrower for the coverage.

If the borrower provides proof that a homeowner’s insurance policy exists, the lender must cancel the force-place policy. They must also refund any premiums paid on the policy during overlapping periods of coverage. In addition, the cost of the force-place policy must be reasonable for the amount of coverage in force.

If there is an escrow account attached to the loan which includes the payment of homeowner’s insurance premiums, the lender is prohibited from obtaining force-place insurance. If the servicer can continue the borrower’s homeowner insurance, even if they need to advance funds to the borrower’s escrow account to do so, they must go that route.

5. Error Resolution and Information Requests

Lenders are now required to respond to written requests for information, as well as complaints of errors. The lender must comply with error resolution procedures for mistakes that are spelled out in the new rules. This includes any errors that are the result of the servicing of the loan.

Lenders are required to acknowledge receipt of the borrower’s written notification within five days of receipt. Lenders then have 30 to 45 days to respond to the borrower’s request. Within that time, they must either correct the error claimed by the borrower, or conduct an investigation to determine that no error exists. If the latter occurs, they must then inform the borrower in writing.

If information requested by the borrower is not available, the lender must notify the borrower in writing. This notice must include an explanation as to why the information is not available.

6. General Servicing Policies, Procedures and Requirements

Lenders are required to establish policies and procedures that are designed to comply with the new rules. That means they must spell out how they will accomplish the following:

  • Accessing and providing accurate and timely information to borrowers, investors, and courts
  • Properly evaluating loss mitigation applications in accordance with the eligibility rules established by investors
  • Facilitating oversight of, and compliance by, lenders
  • Facilitating transfer of information during servicing transfers
  • Informing borrowers of the availability of written error resolution and information request procedures

Each lender must also maintain certain documents and information for each mortgage loan. This must be done in a way that enables them to compile it into a servicing file within five days.

7. Early Intervention With Delinquent Borrowers

Lenders are required to intervene in the event that a borrower may be heading for default. The lender must make “good faith efforts” to establish live contact with borrowers by the 36th day of their delinquency. They are required to promptly inform borrowers that loss mitigation options may be available. The lender must also provide the borrower written notice with information about loss mitigation options by the 45th day of a borrower’s delinquency.

8. Continuity of Contact with Delinquent Borrowers

Lenders are now required to make early contact with borrowers who are at risk of default. That contact must also be on a continuing basis. Once again, the lender must be fully prepared to assist the delinquent borrower with loss mitigation options where they are available.

The lender must make reasonable efforts to ensure that personnel are assigned to a delinquent borrower by the time written notice of early intervention is required. This can be no later than 45 days after a borrower’s delinquency.

In addition, the assigned personnel must be accessible to the borrowers by phone to assist with loss mitigation options. This includes advising the borrower on the status of a loss mitigation application, as well as expected timelines. Those personnel are also expected to have access to all of the information surrounding the borrower’s situation. This information can be shared with other personnel who are responsible for evaluating the loss mitigation options available to the borrowers.

9. Loss Mitigation Procedures

This rule gets to the heart of the attempt by the CFPB to provide the borrowers with more options and protections in the event of foreclosure. The borrowers must be given every opportunity to avoid foreclosure through loss mitigation.

The lender must follow specific loss mitigation procedures. For example, the lender is required to acknowledge the receipt of a loss mitigation application in writing, within five days of receipt. They must also inform the borrower whether or not the application is complete. The borrower must be apprised of any missing information.

If the completed loss mitigation application is received more than 37 days before a foreclosure sale, the lender is required to evaluate mitigation options within 30 days. This must include options that will enable the borrowers to retain their home. It must also include non-retention options, such as a short sale.

The lender is required to provide the borrowers with written notification of the decision in regard to loss mitigation. This includes the reasons for denying the application. The borrower must also be able to appeal the denial, under the provision that the complete loss mitigation application is received at least 90 days before the scheduled foreclosure sale.

This rule also prevents what is known as dual tracking. That’s a practice in which the lender is simultaneously evaluating a borrower for loan modifications or other mitigation options, at the same time that it is preparing to foreclose on the borrower’s property. The rule prohibits the lender from making the first notice or from filing requirements for the foreclosure process until the mortgage account is more than 120 days past due.

But even if a borrower is more than 120 days late, the lender may not begin foreclosure proceedings if the borrower has submitted a completed loss mitigation application before the foreclosure process has begun. This rule applies unless any of the following takes place:

  1. The lender notifies the borrower that they are not eligible for any loss mitigation option. Also, all appeals have been exhausted
  2. A borrower rejects all loss mitigation offers
  3. A borrower fails to comply with the terms of a loss mitigation option, such as a trial modification

However, if the borrowers submits a completed loss mitigation application after the foreclosure process has begun, but more than 37 days before a foreclosure sale, the lender may not move for a foreclosure judgment or order of sale, or conduct a foreclosure sale, until one of the three conditions above has been met.

In general, the CFPB Mortgage Protection Rules are designed to improve the working relationship between borrowers and their mortgage lenders. And it is ultimately hoped that the rules will make the foreclosure process both less likely and less painful.

(Sources: What mortgage servicing rules apply to me?, What the new CFPB mortgage rules mean for families and homeowners, and Summary of the final mortgage servicing rules)

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In chemistry, a catalyst is something that triggers a reaction — but the nature of the reaction itself depends on having the right elements in place to respond to the catalyst.

What brought to mind that tattered remnant of high school chemistry was thinking back on buying my first house.

I’ll explain how I got from home-buying to chemistry — and, in the process, hopefully share some pointers about what elements should be in place when you buy a home and what catalysts might trigger you to react to those elements.

The chemistry of home-buying

The reason I’m talking about home-buying in terms of chemistry is that there is more to buying a home than pure dollars and cents. Don’t get me wrong. The financials are important, and I’ve written a fair amount about some of the financial aspects of home-buying. However, what is equally important is your personal outlook.

Generally, the elements of your personal situation fall into place bit by bit over time, and you might not really notice how they are developing. It can take a catalyst to set everything in motion.

In my case, the catalyst was simple: Our landlord tried to raise our rent by $50. That doesn’t sound like much today; but at the time, it was 12.5 percent of the rent we were paying previously. More than that, it was a catalyst to us. We realized that renting meant being subject to that unpredictability every year when the lease term ended.

Once that catalyst sparked the idea of buying a home, all the right elements were in place for us to follow through on our decision. My career was progressing well, I had gotten married and we planned to have kids, and we had family roots in the area. If it hadn’t been for that catalyst, though, I’m not sure how long it would have taken for it to occur to us to buy a house. So, we have our landlord to thank.

Here’s how the chemistry of home-buying might come together for you.

How to know if it is time to buy a house

Here are some of the right elements for buying a home:

  • Career stability. This does not necessarily mean that you plan on staying in the same job, but that you have in-demand skills and that there is a healthy job market for those skills within commuting distance of the house you plan to buy.
  • Commitment to your area. It could come down to the weather, family and friends, arts and entertainment, or all of the above, but you need to figure out where you want to be for the long haul. It’s okay to be restless when you are young, but it is better if you aren’t that way after you buy a house.
  • Clarity about your household. It might take several years before you start to have clarity on what your household will look like in the future: Will you marry? Do you expect to have kids? Will elderly parents come live with you at some point? The more clarity you have about the size of your household in the years ahead, the easier it is to know what kind of home to buy, though it is always wise to make choices that build in a little flexibility as well.
  • Knowing yourself. Life plans and personal tastes take a while to evolve. Don’t rush into home-buying unless you have a good handle on what you want for the long term.
  • Affordability. This is an entirely different area of discussion; but if the dollars and cents don’t add up, not all the elements for buying a home are in place.

Catalysts can help you decide

Given the right elements, what can trigger you to act on them? Here are some possibilities:

  • A jump in rents. As I mentioned, that did it for us. It changes the current comparison between renting and owning costs, and makes you think about stabilizing your housing expense for the future.
  • Low mortgage rates. You should look at today’s mortgage rates as an opportunity that might not always be there. If home-buying is in your future, you might want to accelerate the timing to take advantage.
  • A change in household. Getting married or having a baby might mean you have to find a bigger place anyway, so you might think about doing that by buying.
  • A strong raise in pay. A meaningful bump-up — beyond the standard annual cost-of-living type of adjustment — could not only give you the financial means to buy a home, but it might also be a sign that your career is well enough on track for you to make that kind of commitment.

In short, besides the math of affordability, buying a home comes down to the chemistry of your personal situation. Perhaps if we had known so much was riding on math and chemistry, we all would have paid more attention in high school.

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Over the years, I haven’t been too kind to the best-selling author, Robert Kiyosaki. He’s certainly built a successful empire, and a large community people respect him for his business acumen, his willingness to try or to appear to try to help others, and his advice. However, I’ve always found his advice thin at best and dangerous at worst. I received his latest book, Second Chance: For Your Money, Your Life, and Our World, and before opening the book to the first page, I decided to give Kiyosaki his own second chance — and read the book with an open mind. His publisher probably didn’t read my previous commentary before offering to send me a copy for review.

I read the entire book on a flight from Phoenix to Philadelphia, and my second chance paid off — I thought this book was an improvement over Kiyosaki’s earlier works(I’ve only read a few), yet not without its frustrations.

Kiyosaki uses several devices in his latest book to tell his story. The first is an all-out admiration of Buckminster Fuller, starting with the book’s dedication and infiltrating every chapter. This makes some sense, as Kiyosaki has always used some of Fuller’s literary techniques, which I’ll get into a little further down this page. Fuller was a futurist, and more than any of Kiyosaki’s other books, Second Chance also takes a look at the future and the decisions one can make therein as a way of dealing with the economic struggles of today’s post-recession world.

It was Kiyosaki’s so-called “poor dad” who first admired Fuller, and this early glorification set the wheels in motion for an approach to life that would favor the lessons of the author’s “rich dad.” (I’m ignoring the debate about whether “poor dad” and “rich dad” exist or are part of an allegory. The use in the book of Fuller as a driver instead of “rich dad” eliminates the need for debate, so readers and critics can focus on the words.)

Fuller, or “Bucky,” appears throughout the book as an inspiration to Kiyosaki through words of advice in Fuller’s own published words and in private conversations with the author. This explains much of who Kiyosaki is today. Fuller made up words or changed their meanings to encourage people to see the world differently, or as he saw the world, and Kiyosaki takes the same approach. It works. People who aren’t accountants or have a financial education — most people — would first read Kiyosaki’s books without a solid understanding of the terms “asset” and “liability” in a financial context.

Kiyosaki, years ago, saw the opportunity to make those words mean something else. And those who accepted Kiyosaki’s version of an “asset” became life members of a secret club. They “get it.” And if you disagree, you don’t “get it,” and you’ll never succeed in the way Kiyosaki wants you to succeed. For Kiyosaki and his followers, a house is a liability, not an asset. And if you don’t want to accept this version of reality, the author’s books, lessons, and seminars won’t do you any good because you don’t believe.

These redefinitions and others appear throughout Second Chance, but it seems to be Fuller’s pamphlet Grunch of Giants that had the most profound effect on Kiyosaki’s life. The bankers control the world, the government is out to get us, and the military-industrial complex something something. Grunch of Giants is an interesting read, but it’s just a little paranoid.

The second trope is familiar to Kiyosaki readers: the angst for traditional education and the glory for real-estate seminars. This appears so frequently throughout the book that it’s impossible to ignore. Kiyosaki’s companies produce real-estate seminars, so it’s no surprise he’s writing about the idea of getting a real education through this method as often as possible. I don’t recall him specifically selling his own seminars throughout the book, but it certainly plants a strong idea in the readers’ mind. If a reader comes away from the book thinking college is useless and the money for college is better spent attending a real-estate seminar each month, the first place that reader would go is to Kiyosaki’s own educational products.

Again, just like invented language, this concept exists as a filter. If you don’t feel the same way as Kiyosaki about traditional education, you’re not going to read his books and attend his seminars. If you did, you’d probably think they were wastes of time. He doesn’t want you. He wants people who are frustrated or unable to succeed in a college setting. They will make good customers. People without a college education are more likely to fall prey to people taking advantage of them.

The third recurring theme of the book is an idolization of wealth. Readers who buy this book are more likely to have goals to be wealthy than to have goals that go a little deeper — for instance, to use wealth to do good things for others. It’s not the simple get-rich-quick crowd of the 1980s, but it’s a more complex, grown-up version of that audience. The way the author uses the idolization is through frequent “question-and-answer” sessions, where it is implied that the reader is asking simple questions which Kiyosaki “answers.” The questioner in these exchanges is characterized as envious, curious, and a little slow; the answerer is characterized as rich, sophisticated, and absolute.

The book describes an exchange between Kiyosaki and a few construction workers. Kiyosaki drives up in a Ferrari, and the workers are envious, thinking they could never afford such a fancy car. Kiyosaki, in this story, proceeds to tell them they can, and that it’s just a matter of owning properties that put off positive cash flow, and that can be done without the education that the construction workers obviously do not possess. And here in this story, we see Kiyosaki positioning himself as the wealthy but down-to-earth, friendly guy who’s happy to teach unfortunate souls about something they will probably never be able to do. It’s the whole premise of the book — and Kiyosaki’s career. The readers are the construction workers, and Kiyosaki’s got the Ferrari the readers want. Please tell us your secret!

In Second Chance, Kiyosaki goes on record again with a prediction: There will be a market crash by 2016, which is the same prognostication he offered in an earlier book. The author believes that the recession of 2008-09 was partial fulfillment of that earlier prophecy. Oh, but he later demurs, and says that if the 2016 crash doesn’t happen, it would be due to artificial propping-up by the powers that be; thus, Kiyosaki stands to consider himself correct whether a crash (to which the latest recession when compared would just be a minor event) occurs by 2016 or not.

The book contains a number of misleading charts. In some cases, the data being represented in these chats doesn’t really prove the point that they author is trying to make, and in other cases, the data is represented in such a way that it is misleading. There is one such chart that supposedly shows that unemployment is rising for workers with at least some college education. The chart makes it appear that unemployment is decreasing for workers with just a high school education or less, and that’s simple a misleading graphical representation of data. Kiyosaki is careful in the text not to make an inaccurate claim about what the data show, but the visual representation allows readers to walk away with the wrong idea.

What Kioysaki might be getting right.

These annoying tropes aside, and the fact that the book contains no index and makes writing this article very difficult, there are many interesting ideas within the book that are worth discussing. Here’s what I liked reading about.

Three types of wealth. Kiyosaki borrowed the concept from another author, but discusses it in detail. “Primary wealth is resource wealth.” If you own oil — actual oil, not oil funds or ETFs or shares in companies that are involved in the oil industry — you have a protection that those with only tertiary wealth do not have. It’s not just oil — it’s fertile land, trees, and other natural resources, and Kiyosaki includes gold and silver in this category.

“Secondary wealth is production wealth.” Those who work directly (and own businesses that) produce food or other products, dealing with the resources owned by those with primary wealth, you have secondary wealth.

“Tertiary wealth is paper wealth.” This identifies the majority of Consumerism Commentary readers and myself. Savers, those with money in the bank or invested in stock market, fall into this category. This is the “affluent investor class,” and those who will be hurt hardest by the next (or any) market crash.

It’s true that shareholders and savers have the most to lose, but that doesn’t mean that those with secondary or primary wealth are fully protected. Businesses can fail, resources can dry up, and there’s always going to be an entity that more powerful than you — and I don’t mean God. Companies getting rich with oil in North Dakota are now finding that their lives can be upended in a matter of weeks when OPEC decides the price of oil needs to be lower.

The Cashflow Quadrant. From Kiyosaki’s other books, the “Cashflow Quadrant” makes an appearance here. The quadrants describe the type of work one might do and how the income from that work can be classified. I’ve been in all four quadrants: employee, self-employed, business owner, and investor. The quadrants are determined by tax law. If you’re self-employed, you pay the highest taxes — but what’s different between being self-employed and being a business owner? Well, even when self-employed, your working to get paid; a business owner is looking more at the value of an asset — the business — she is creating.

Basic principles in psychology. The author addresses a number of aspects of psychology that should be familiar to any student who has taken an introductory-level course: Maslow’s Hierarchy of Needs and a variety of intelligences.

I’ve written at length about Maslow’s Hierarchy of Needs here at Consumerism Commentary.

The latter looks beyond classical measures of intelligence like IQ, and beyond the two types that he feels receive the most attention in traditional education, verbal-lingustic and logical-mathematical. Skilled dancers and athletes have strong body-kinesthetic intelligence; artists have strong visual-spatial intelligence; musicians have musical intelligence; strong communicators and socializers rate highly for interpersonal intelligence; and self-motivators have strong intrapersonal intelligence. Kiyosaki adds a spiritual intelligence to this list.

Generalists and specialists. Kiyosaki points out that specialists are not suited to being entrepreneurs. They may be fantastic at one particular skill, but operating a company requires a lot of knowledge of many different aspects of a business or industry.

I lean on the side of agreeing with Kiyosaki here. Career advice tends to sit on the opposite side, often explaining that being as good as possible in one specific area is enough to get a great job and build a good career. The versatility that comes with being a generalist has allowed people who are more adaptable to survive better through the recession, and these generalists have the capacity to to succeed in any situation.

Overall, em>Second Chance: For Your Money, Your Life, and Our World points out the value in owning real-estate property and resources, but like all books, doesn’t offer too many hard details and doesn’t address risk. To go deep, the author assumes that the reader will attend seminars, and the prediction of a 2016 crash creates some urgency for the reader.

Honestly, when I closed the book after reading it cover-to-cover on a flight from the West Coast to the East Coast, I did feel motivated. I’m in a position now where working doesn’t add much to my net worth, and I need to start focusing more on cash flow. I am aware of this and I’m actively looking into ways to make that work, from buying web-based businesses that all ready produce an income (Kiyosaki does promote this idea in the book) to multi-family or corporate real estate.

The work I do today is mainly for cash flow, but it’s been more of a trickle than a gush. I have no interest in earning Ferraris or living some kind of lifestyle Kiyosaki believes motivates his readers, and I’m technically free to do whatever I like with my life from a wealth perspective. I’d much rather live off cash flow than assets, and the book has encouraged me to think about this more.

For more on Robert Kiyosaki, see Rich Dad Academy and Is Your Home an Asset or Liability?

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Yesterday, I pointed out that the house you live in is an essential part of your net worth calculation. But determining the value of your house, especially if it’s the house you live in and not something you track as an investment, can be tricky.

It’s easy to determine the value of your mortgage to include that in your net worth calculation. Just look at the latest statement from the lender. The statement will highlight your remaining balance, and it’s a number you can’t escape if you do in fact, as you should, look at your statement every month.

The house can be trickier to value. But if you include your mortgage in your net worth calculation, you should also include some value for your house. And it should be a value that makes sense. There are at least three ways to determine your home’s value for the purposes of your net worth calculation.

1. The value of your home is the price you paid.

When you purchased your house, you and the seller agreed upon a value. You then paid the seller that much money, whether you borrowed the money or not, and paid additional fees to complete the purchase. It’s not wrong to consider the purchase price the value of your house for your net worth calculation purposes. No one could say that your figure would be wrong if you use this approach. After all, this was the last market-confirmed value, and there won’t be another market-confirmed value until you sell the house.

This is a problem if you’ve lived in this house for a substantial amount of time. Your community may be more desirable than it was when you moved in, or it may be less desirable. Your neighbors in similar houses might have sold their homes for more money in the intervening years, and the sales price of “comparables” may effect the potential sales price of your own home. You may have made improvements to your home or you may have let it fall apart. All of these factors can change the value of your home, and you can’t be sure until you put it on the market and receive at least one offer.

The big benefit of using your house’s purchase price as the value of your house in all future net worth reports is that it ensures your net worth progress reflects mostly the financial decisions you make on a day-to-day basis. That would allow your net worth progress to present a better picture of your behavior with money, but it wouldn’t really represent your true net worth at any one time.

If however, you own your house for a sufficiently long time, there’s a great chance the value of your home will be so far off from the purchase price that your net worth with a number in old dollars is relatively meaningless. An interesting remedy would be to use your purchase price initially, and then adjust your home’s value on your balance sheet once a year based on the rate of inflation. This will allow you to continue using the house’s purchase price, but it was always be in “today’s dollars,” just like your mortgage and the rest of your balance sheet.

2. The value of your home is defined by appraisal or competitive market analysis.

In order to pay property tax, your local government depends on appraisals. Appraisals provide a way for the government to look at your land, your home, and any changes to either since the purchase of your home to determine the amount of your tax bill. Appraisals also come into play when you’re going through the process of selling your home. When you pay tax, you want the appraisal to be low, while when you’re selling, you want the appraisal to be high. And if an appraisal isn’t inline with the owner’s expectations, the owner can challenge it.

Using the latest appraisal in your net worth statement offers a more timely valuation, but it may not be a valuation you agree with. It may not be a valuation that has any relevance to the amount of money a buyer would be willing to pay, either. It is the result of someone’s opinion — a professional’s opinion — but a real estate agent familiar with your home and your neighborhood may be better professional to offer such a valuation. And if you ask a professional who doesn’t have any reason to exaggerate, you can probably get a relatively accurate estimate.

A real estate agent might be willing to do a competitive market analysis for your property if you appear to be intending to use that agent to represent you in a sale. And certainly, an agent who is willing to do this work for you will feel he or she is in a good position after doing a significant amount of work for you to choose that agent as your broker.

A competitive market analysis may be more accurate than an appraisal, but neither of these would you do every month to keep your net worth calculation “accurate,” or to follow the potential of a sale price that might change on a month-to-month basis.

3. The value of your home is provided by Zillow.

Anyone who has shopped for a house in the last few years is likely familiar with Zillow. I’ve only just begun to look at houses — and I’ve paused those efforts during my latest round of travel — and I’ve been using Zillow to plan most of the visits. Zillow’s estimate — or Zestimate — for one property I was interested in was a good $100,000 or more higher than the seller’s asking price.

So how does Zillow come up with their estimates for each property? Zillow uses public data about recent sales and uses a calculation — a proprietary formula — that takes factors about the home and its neighborhood into account. A few real estate agents I’ve talked to don’t like Zillow’s estimates. It seems to make their job more difficult, and they believe it could lead buyers or sellers to make bad decisions. I think it’s important to remember this value is just an estimate, but it is based on data, and that makes it appealing to people wishing to track their net worth (as well as to people house shopping).

A publicly-recorded sale of one house in a neighborhood can send Zestimates in one direction or another without much warning, even if that house bears little resemblance to one’s own. And that’s one of the possible reasons house values are fluctuating month to month on the net worth report submissions from Naked With Cash. Zillow offers verifiable data to support a valuation on a balance sheet, and it gives someone the comfort level of not having to guess the value of their property on a day-to-day or month-to-month basis.

The question is whether Zestimates are correlated to actual sales prices. And there have been a few analyses completed outside of Zillow to determine if there is a trend of Zestimates to be higher or lower than realized prices, but every area seems to be different.

What is your method for including a value for your house on your balance sheet? I have not owned a house in the past, and I don’t own one now, so I’ve had no reason to decide on a method for myself. I’m curious how other people think about the value of their house while they own in.

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You Need to Include Your House in Your Net Worth

by Luke Landes
House

Naked With Cash participants include their houses in their net worth, if they own houses. Is that really necessary?

2 comments Read the full article →

Don’t Let Contractors Rip You Off

by Mitch Lipka

It’s the height of home repair season, a time when established contractors are often in demand and unavailable. That’s a big opportunity for the fly-by-night operators to step in. Hiring a contractor to do work on your home, whether it’s a relatively small job or a major renovation, is a big deal. For most consumers, […]

4 comments Read the full article →

The Only Way Buying As Much House As Possible Is Smart

by Luke Landes
Buying as much house as possible

Once again, I’m finding myself nearing the end of my one-year lease with the need to make a decision about my living situation. I moved to my current apartment in the summer of 2007, at a time when I had been more comfortable living off some of the income from my business. Until that point, […]

22 comments Read the full article →

Higher Home Ownership Linked to Higher Unemployment

by Luke Landes
Home ownership

American culture has long promoted the idea that home ownership is key to the fulfilling middle-class lifestyle. You can be sure the National Association of Realtors will continue to do its darnedest to keep this interpretation of the American Dream alive; whether you’re buying or selling, it’s always a good time for Realtors to earn […]

7 comments Read the full article →

Better Bargains With Foreclosures and Pre-Foreclosures

by Luke Landes
Zillow Pre-Foreclosure

I’ve taken a cursory look at the possibility of investing in real estate near where I live, with the intent of buying a property for rental. The numbers don’t work well in my favor. I’ve confirmed this with friends experienced with renting their properties in the area; most would not do it again if given […]

7 comments Read the full article →

Mortgage Fraud: U.S. Government Suing Bank of America for $1 Billion

by Luke Landes
Bank of America

I never liked the term “hustle” when used to discuss making money on the side. The word has the slight connotation of fraud or taking advantage of someone, and moving quickly to do so. Now, the word “hustle” is going to be linked to something more specific and decidedly negative. This was the name of […]

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