Zillow Says I’m $400,000 Wealthier! Why Net Worth Is Rubbish

Primary Residence Zestimate

Primary Residence Zestimate

To prove our point regarding “Your Net Worth Is An Illusion” I took a look at Zillow’s latest zestimates of my primary residence and rental property.  Apparently, in a span of 3 months, my primary residence gained a whopping $300,000! I’m popping open a bottle of  Crystal, buying a rose gold Patek Philippe Calatrava at Tiffany’s, and ordering the Audi R8 on as we speak.  Just kidding, especially since September is frugality month. Besides, Zillow isn’t writing me a check for $300,000!

The dollar sign shows the purchase price after a 4 month escrow that began in late 2004.  In other words, the purchase price was $250,000 below what the zestimate measured as fair value in the middle of winter.  You’d think that after 4+ years of existence, Zillow’s price algorithms would be more refined.  Perhaps the data is legit, but I’m not buying it. Since net worth calculations don’t include one’s primary residence, let’s strike this example and look at a rental property.

Family Gets Award For Paying Off Debt & Jumps Right Back In!

If you go $106,000 into personal debt, and pay it off in 5 years, you apparently get the Professional Achievement and Counseling Excellence (PACE)  2009 Graduate Client of the Year Award. I was hoping for a longer award name, but what a great nugget to put on their resume!

The kicker?  The Hildebrandt’s decided to dive back into debt with one year left on their pay back plan by buying a house! Furthermore, they took advantage of the $8,000 first-time home buyer tax credit. The article ends with sage advice from the Hildebrandt’s saying, “Get out of debt, it’s a choke-hold.”

One of the greatest things about America is free speech.  Good or bad, we are a society that coddles fragile self-esteem and rewards people for situations they shouldn’t be in from the onset.  Although The Hildebrandt’s aren’t practicing what they preach, they’ve got their award and are living the American dream.  Congrats guys!  We can’t wait for your next award.

Meet The Hildebrandt’s and read about their great achievement.

Related Posts:

“Should The First Time Homebuyer Tax Credit Be Expanded And Extended?” from Xin Lu of Wise Bread and The Baglady.

Keigu,

Financial Samurai

“Slicing Through Money’s Mysteries”

The Mortgage Dance of Money: Should I Pay Off My Mortgage Or Not?

“Should I pay off my mortgage as soon as possible or not?” is a common question which warrants more attention now that mortgage rates are back down to record lows as of June 29, 2010.

The answer is pretty simple actually.  You should pay off your mortgage sooner if you have the money. By the way, the sky is blue.  Thanks for nothing, you’re thinking.   However, if you really think about it, that’s the right answer!

It’s all about balancing your debt/cash ratio.  Build up too much home equity (prepaying) based off of your own principal payments, and you run the risk of blowing yourself up when there’s a cash crunch due to unforeseen circumstances.

Your conservativeness of paying down your mortgage ironically INCREASES your chance of financial doom.   Not paying down your debt sooner, on the other hand, inhibits you from maximizing your returns.  Dance with your mortgage without stepping on its toes!


THREE VARIABLES TO CONSIDER BEFORE PAYING DOWN YOUR MORTGAGE:

Why I Can’t Bank At Wells Fargo

A Wells Fargo Senior VP, Cheronda Guyton moved into a foreclosed $12 million mansion with her family and hosted extravagant house parties.  Meanwhile, her job is to figure out how to profit from foreclosures (well done!), but she didn’t allow brokers to show the Wells Fargo-owned place because her family was squatting!

I knew there was something funny a couple years ago, when I was talking to one of their mortgage brokers and the rates he was quoting were 50-100bps higher than everyone else.  Bank of America got my business instead.  Too bad Ken Lewis was so empire-building driven and panic bought Merrill at the market open, instead of after the close.  What’s $25 billion more between between shareholders?

Given we live in bizarro world, don’t be surprised if Wells Fargo goes ahead and promotes her to lead up a different department.  After all, Wells Fargo does technically own the foreclosed home, and can do what they will.  Their $60,000/month vacation rental asking price might sound excessive, but not as excessive as Cheronda Guyton not letting anybody rent it out because she wanted to pump up the base herself!

Great to see our $25 billion in tax payer bailout money be put to good use.  Thanks for everything Cheronda.  Tell you what guys, since we are PR experts here at Financial Samurai, why don’t you Cheronda donate the $240,000 in lost rental income to the LA firefighter’s fund, and ask your employer to match it.  Here’s your article with further details.

Keigu,

Financial Samurai – “Slicing Through Money’s Mysteries”

Property Makes People Think Irrationally

Over at a new found site called ” The Writer’s Coin,” the 28 year old personal finance writer questions whether he should buy this house if he only has 13% down. Mind you, he has been giving personal finance advice for a couple years now, and is even a guest poster on mega-site Wisebread, which Financial Samurai may one day contribute to. Honestly, I felt like I was watching one of those Holiday Inn commercials reading his post. A guy would provide some great advice and become a medical doctor because of his one night stay at the hotel chain. But what about the next night when he has to sleep at home?

WC’s question got me thinking. If someone who has been disciplined enough to write about money matters still can’t see the fallacy of buying a house with only 13% down, why are we so weak when it comes to housing? Do people just blindly fall in love with something and disregard every financial principal?  Doesn’t seem like WC has much more saved up than 13%, because who says “13% down” anyway? Why not 10%, 15%, or 20%?  Heck, back in the good old old days, people paid 100% down.

How did we come to this pitifully low downpayment standard in America? Probable explanation #1) It’s the Madoff Syndrome aka greed! “I want this, and I want it now!” and #2) The Nesting Syndrome.  There is a tendency for those in a long term relationship who want children to buy a place. I don’t even have to read WC’s about page to guess he’s planning on getting married or having kids. For the guy specifically, the itch seems to start at 30, if not sooner. The desire of owning our own castle and showing we’ve “arrived” is strong.