Maximizing your Use of Zillow

My home value courtesy of Zillow.
You can see when I bought it back at the end of 2011.

If you own a home or are thinking about owning a home, then you've probably heard of the property value estimation site called Zillow.  For the uninitiated, this site does a great job at tracking your property value and  allowing you to see recent homes for sale, the price of recent sales, and whole bunch more information.  Since most of this information is public knowledge, Zillow has just used this information to create a more user-friendly database.

One of the most interesting features of Zillow is that you can take ownership of your own property estimations and make sure they are incredibly accurate.  Since Zillow bases most of its property value estimations on larger scope characteristics such as number of bedrooms and bathrooms, actually going into my own property and indicating things such as plaster walls and 2 fireplaces allows for a much more robust estimation.  If you are ever planning to sell your home, keeping your Zillow information updated and accurate will provide you with a good start on where to price your home.

Another benefit to keeping your home value current is if you ever have to challenge your home assessment for tax purposes.  With the housing crisis destroying approximately $20 trillion in home wealth back in 2008, many home values have never reached back to where they were prior to the crash.  It might be a good time to challenge your assessment now.  When I moved into my home back over a year ago, it was assessed at $211,000 for which I paid $136,000.  The assessment board comprised with me and lowered my house to $145,000 which translated into a $100/month savings on my mortgage payment (I have it escrowed so it includes property taxes).

Here's the part about Zillow I love the most; it allows you to set a "Make me move" price.  The theory being that if someone was shopping for a house and fell in love with yours (even if it is not for sale), then that person could offer you the "Make me move" price and you'd probably accept it.  I encourage everyone to set a "Make me move" price even if you never plan on leaving, and here's why.  If everyone in your neighborhood started listing prices 10-20% higher then the Zillow value, then people wanting to move into the neighborhood will more likely just assume that this is the price to live there and property values will start increasing as more homes are sold close to the "Make me Move" price.  Now this is just a theory I have as most people don't bother setting there price, and therefore I'm not able to test it.  You'll notice for my own house, I have it set at $200,000 even though I don't plan on moving.  Now if I could only convince my neighbors.

Go out and set your own "Make me Move" price today, and hopefully you'll start seeing results.

Wonderful Moment of the Day: Watching my cat wake up in the morning.  He's not a morning cat and it usually involves 5 minutes of squinty eyes, stretching, and rolling around...actually quite comical!

My Top 5 Favorite Blogs

A friend of mine asked me recently to list out the blogs I read on a regular basis.  Since the advent of the modern "Web 2.0", blogging has been all the rage (pretty obvious since even I'm doing it), and there are an infinite number of topics covered out there.  The blogs I tend to read our finance based with a early retirement genre.  By no means would I say that everyone would find these interesting, but nonetheless, I am incredibly entertained with their concepts and information.  Without further delay, I give you my favorite blogs:

1.) Early Retirement Extreme - This is the blog that started me on my journey to be financially independent.  Written by Jacob Fisker, he explores much more then the name would suggest; diving into concepts such as economics, personal philosophy, and overall macro-economic theory.  He offers a stage by stage process to get you to retirement earlier than you ever thought possible, while also promoting the "Renaissance Man" ideals.  While not as active as he once was, he still writes a post or two, but has since passed the early retirement torch to "Mr. Money Mustache".

2.) Mr. Money Mustache - Coming on a little more flashy than ERE, Mr. Money Mustache has taken early retirement theory into the mainstream with his forums, twitter, reddit, and facebook profiles.  If Fisker was the profit for early retirement, MMM is the evangelist preaching the good news.  I often find his writing pretty fun to read, and it makes for some thought provoking conversation.  Whereas Fisker lived off of $7,500/year, MMM lives off of a more reasonable $20-$30k/year with him, his wife, and kids.  This adds for a much more practical set of retirement instructions, and lends him to be much more legitimate in my view.  He even has a name for his many readers, calling them "Mustachians" which offers a community like atmosphere.

3.) Bogleheads - More of a forum than a blog, Boglheads offers its readers the chance to communicate on all things (mostly financially related).  This forum taught me much about investing and the "Boglehead" philosophy on markets.  Check out their wiki page for a deeper dive into their investment ideals, and feel free to make a post or two.

4.) BraveNewLife - I find this blog quite interesting because the author has some non-traditional investing strategies along with his more traditional securities.  More specifically, the author uses about 1% of their portfolio to experiment with peer-to-peer investing in sites such as Lending Club and Prosper.  It adds for an interesting read when all the other financial blogs start sounding the same.

5.) My Money Blog - I've actually started to read this blog much more than the rest just for the frequency of updates the author makes (sometimes 3 or more a day).  The author is surprisingly open about his financial status and uses it as a tool to teach the rest of us.  With the goal of early retirement in mind, he has a very disciplined and conservative angle which serves as a testament to the rest of us.  Also, he often informs us of current deals and bargains, so it pays to check back at least once a day.

So there you have it, my top 5 blogs I read on a regular basis.  If you even read one of them with some sort of regularity, you will be educating yourself greatly.  Do yourself a favor, and make at least one of these a topic in the future, and hopefully you'll continue to read mine.

Wonderful Moment of the Day: Sweater weather is back!

Covester Review: How to Rack up some Fees

I consider myself a child of web 2.0, and so I've considered it a hobby of mine to find new and interesting ways to maximize my potential.  Well one such site called Covester seemed pretty interesting to me, and therefore warranted a more in-depth review.

From the outside, Covester is a pretty neat looking site and with an even more "neat" form of investing.  Right away, I was lured by their 1, 2, 3 step investing towards better and more rewarding portfolios.  Here's how it works:
1.) Sign up and commit a certain amount of funds towards your investing.
2.) Scan the many "portfolio managers" and how well their current portfolios are comparing to some sort of indices.
3.) Select the portfolio that suites your risk tolerance and overall investing style.
4.) Watch as your portfolio now mirrors everything that the manager does.

The concept itself is rather novel, and I applaud the site for thinking outside of the proverbial box, but there are some things an investor should be wary of.

First, who are these so called managers?  I looked through the application process, and it doesn't seem all that difficult to become one.  Granted, their performance is out in the open for everyone to see, but how do we know that their performance isn't due to luck?  Well, I guess most financial managers have some form of luck to be successful, but still, I find the lack of legitimacy rather disturbing.

Secondly, if you don't initially invest a bunch of money (say $50,000 or higher) from the start, you could be racking up some huge trading fees.  Some of the portfolio managers are day traders, and if you happen to pick one of these folks to follow, you'll be stuck paying a trading fee (or commission) everytime they do.  Imagine paying $80 - $100/day in trading fees!  Secondly, like all mutual funds, the fund managers have set up expense ratios for themselves to receive.  These portfolio fees are usually between 0.50 and 2.50% which are rather on the high end. 

Given the amount of fees, I would definitely stay away from this style of investing.  If you find yourself still intrigued by this concept, try to find a fund manager who only makes a couple trades per year. 

The real benefit to this whole trading scheme comes to those of you who would like to be a portfolio manager.  At minimum, Covester offers a no fee way of tracking your own portfolio performance.  On top of that, if you are indeed doing a good job, you could possibly earn some trading commissions from customers who choose to follow you.  This definitely seems like an interesting option!

So customers beware, and sellers be happy, because Covester may have some options for you.

Wonderful Moment of the Day: Realizing that my tomato plants are going to survive one of the worst draughts in our area ever!