Ever run a marathon and think you can’t make it but suddenly the finish line comes into view? Me neither, why would I run almost 27 miles for nothing? Those folks are crazy (but deserve a ton of respect for doing it). Anyway, my one month house hunting trek is coming to a close. As I mentioned in a previous post, I came in with the second best offer to a “slightly” higher offer on a great home that’s “the nicest in the development.” (quote from a neighbor, taken with a grain of salt) I was asked if I wanted to increase my offer and declined for reasons I outlined in the previous post. It turns out that was 100% the correct decision as the highest bidder backed out, they didn’t agree with the contingencies and I’m next in line!

There are 8 contract changes and they all point towards a speedy settlement, within three weeks, which is going to be a challenge but doable. The main points of the changes are that the sale price will be $295,000 (justification to be explained later, home inspection to be completed in three days, loan approved within two weeks, a $5,000 deposit (versus the $2k I initially put down), and everything closed before Memorial Day. There are other minors points not worth mentioning.

I met my agent last night to sign the paperwork changes to the contract and leave a $3,000 check, to be held in escrow and put towards closing costs whenever everything settles. I also found out some interesting facts that made me feel like a freaking genius (if I do say so myself). The “slightly” higher off was for $296,000 by the highest bidder with a totally cash purchase. The agent obviously went back to them and said we need the rent back until July 31st, that’s our counter-offer. The highest bidder then offered $315,000! They also probably weren’t willing to do the rent back otherwise I wouldn’t have stood a chance, their offer was $20,000 higher than mine! My hope of only winning because of the rent back succeeded and my decision to not increase the offer another $5,000 or $10,000 was wise because I would’ve just thrown that money away. A higher contract offer wouldn’t have resulted in my winning the house outright and they would’ve told me my second offer is what was necessary if I really wanted to keep the house. I’m stunned we won based on that $20,000 difference, sounds like the rent back (it could’ve been anything but it’s probably the rent back) is worth a lot to the seller (it’s their market).

Any buyer’s remorse? Not yet… I’m paying $121.41 per square foot on this property, which is within the $120 to $130 guidelines someone who had spent six months looking for a home had told me their agent said. At $75,000 a bedroom, the price comes in under the $300,000 wire. Finally, it’s in a great area. The only “bad” thing is that neighboring homes sold, within the last three months, in the $250’s so I may have a low appraisal problem. Either way, someone else believed it was worth $315,000 and I got it for a $20,000 discount.

Finally, since I’ll need to rent back until potentially 8/1, I’ll be renting a basement from my friend for a month. Check it out, I think it’ll work out great in the Rent Back Shack.

My agent notified me that I put in the second highest offer (the other one was “slightly” higher) for the property I talked about in my previous post about full financial disclosures. I am still in the running though because there is a sticking point with the top offer, though the seller agent didn’t identify it to us. It was never listed that the seller wanted to rent back until the end of July and we believe that’s the sticking point. The highest offer also disclosed that they have $350,000 in the bank, so the low appraisal and the lending issues aren’t a problem for them. Did we want to offer more? No, and here’s why.

My agent and her advisor both agreed that I would be in stronger shape if I put in an offer of $305,000 compared to my initial high point of $295,000. Both my girlfriend and I agreed that we weren’t going to break the $300,000 barrier because we didn’t like it that much but we needed to be reasonable - $10,000 when you’re already at $295,000 isn’t that much money.

Assumptions:
1. The sticking point was in the rent-back. It’s very important to the sellers.
2. Slight means no more than $5,000 or so.

Reasons for Not Offering More:
The first thing I thought about was where did the $350,000 come from? If it came from a prior home sale, the other bidder may not have the convenience of waiting an additional month. They probably don’t want to stick around in a hotel for an additional month. If so, they withdraw their offer and we get the house for $295k.

Let’s say the $350,000 isn’t from the result of a home sale, they can still raise their offer above ours. We would be playing into the selling agent’s plot of getting into a bidding war we can’t possibly win. In this case, offering more wouldn’t help us.

So right now the only bargaining chip I have is the rent-back, which is something I can’t control. We’re going to stick to our guns and the $295,000 offer and we’ll let you all know what happens when 5PM rolls around.

Update: (8:42pm 5/10) I was at a work league softball game when my agent called, apparently the high bidder needed until 8pm (42 minutes ago) to talk to his wife. The fact that their married puts more credence on the “just sold a home” theory, hopefully one of them be tired and cranky by now and the thought of living in a hotel for a month with their stuff in storage is a miserable one for them. Still could go their way, who knows, but it at least makes our “strategy” appear to be the right one regardless of the outcome. It also turns out they want us to secure financing by May 24th. Yikes.

Maybe you just started working full-time or your company just offered Flexible Spending Accounts, but the FSA is the key to saving a lot on your medical bills. At the start of your plan year, you decide how much money you intend to contribute to your FSA for the next year. Each month, one-twelve of that amount is deducted from your paycheck pre-tax. When you payout an eligible medical expense, you submit a form and receipt to be reimbursed from your FSA. It’s essentially a discount on the expense equal to your tax bracket since you pay with pre-taxed funds.

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My realtor faxed in my offer Monday morning on a home that seemed like an incredibly good deal. It’s a 2,400+ sq ft. place in Columbia, MD with four reasonably sized bedrooms (not counting the basement), three and a half baths, and a great deck. The offer I made was competitive enough to warrant the seller’s agent to request what is termed “full financial disclosure,” which meant I was to detail my job, salary, assets, and liabilities in a stock form provided by Century 21. The form was a little funny considering how it asked for the information but the Century 21 logo meant I could trust this was all the information they needed. What struck me as a little strange was that I didn’t need to provide any proof of any of this, though the pre-approval letter (where I did provide proof to LendingTree) did provide secondary proof.

The funny thing about the form, other than I didn’t provide any bank statements or pay stubs, was that in the listing of asset accounts it had checking, savings, credit union, and then an other category. Under checking and savings, there was only enough room for two accounts. I think in the age of online banks like ING and Emigrant, having only two savings or checking accounts is rare. Also, I have a checking and savings account at a credit union (through work and through my father’s work, since I opened those when I was a teenager) so do I count those in credit union or the regular checking and savings. I just went with putting it all in checking and savings and a small sum in the credit union - making sure not to double count any of the accounts.

The gift letter portion of the title refers to how I’m going to get money for the downpayment from my parents, specifically my father (someone has to be writing the gift letter, so it was my father). I searched for about ten minutes on Google and couldn’t find any example gift letter template, just a list of some criteria. Essentially, the letter just needs to say who is giving who money, that it is a gift, and that there is no expectation that the money will be repaid (i.e. the gift is not a loan). The money must be used towards closing costs or the downpayment by rule, but the letter doesn’t need to say this. I’ve provided an example gift letter template that I created myself and that my agent accepted and faxed to the seller.

To Whom It May Concern,
This gift letter is to state the fact that I intend to give to my [nature of the relationship], [your name], a gift of [dollar amount] towards the purchase of a home. This is not a loan and there is no expectation that this sum will be repaid.

Sincerely,

[your benefactor's name]
[date]

I should find out this morning whether or not I’m writing a “DENIED!” or a “I’M FANTASTICALLY POOR” follow-up post.

When you own a piece of property, the county’s tax collector will send you a bill every year for property taxes. In most cases, the respectable individuals pay the bill and nothing more is heard of them again. Every so often, they don’t… for a multitude of reasons. A business might not pay because the penalty is lower than the interest rate they’d get on a loan, so it’s like a short-term business loan without all the paperwork hassles. For a single homeowner, maybe they’re down on their luck or they too want a short-term loan without the hassles of going to the bank. Either way, when the homeowner doesn’t pay the county, then they sell the tax lien in their annual tax sale.

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Citibank always has a bunch of good offers for opening a checking account with them and they’re all structured very similarly. Basically there is a minimum funding amount (typically $1,500), a first tier requirement before you get one award, then a second tier requirement to get the second award. For the most part they’re pretty good deals and I don’t quite understand why they’re (and credit cards) pushing so hard for bill payment, but these promotions are. This contains updated information to the March 10th post.

I’ve listed a few of their offers below and here’s a guide to understanding the offers. In their $200 promotion (Offer Code: CD18), you must fund with a minimum of $1,500 and satisfy both tier requirements to receive those awards. The first tier requirement for the $200 offer is 2 bill payments for 3 months, for which you are awarded$100. The second tier requirement is 2 bill payments for 12 additional months and you will be awarded an additional $100. The total commitment period is 15 months (3 + 12 months). All promotions are available to first time Citibank checking/deposit account customers and you’re required to have .

$200 Promotion: Offer CK57
Min. Deposit: $1,500 in a Regular Checking Account
Tier 1 Req.: 2 Bill Payments for 3 Months, Receive $100
Tier 2 Req.: 2 Bill Payments for an additional 12 Months, Receive $100
Notes: Each Billpay has to be more than $20 each.

iPod Shuffle Promotion: Offer CK59
Min. Deposit: $1,500 in an EZ Checking Account
Tier 1 Req.: 2 Bill Payments within 1st Month, Receive iPod Shuffle 512MB (or equivalent) within 90 days.
Tier 2 Req.: Continute 2 Bill Payments for 12 Months total, Obligations for free iPod complete.
Thoughts: An EZ Checking account has a $1,500 minimum balance requirement otherwise they will charge you fees. If you’re paying small bills (that won’t be more than $1,000 over 12 months, then depositing the minimum of $2,500 will be enough. When I had an EZ Checking account, my balance did fall below $1,500 but my fees were waived for reasons I did not know (I didn’t complain either!). Also, an iPod Shuffle retails at Amazon.com for only $99.99 so it might be worth it to do the $200 promotion and just buy your own Shuffle.

$100 Promotion: Offer CC2Z
Min. Deposit: $1,500 in a Regular Checking Account
Tier 1 Req.: 2 Bill Payments within 60 days, Receive $100
Tier 2 Req.: None

My personal experience was with a $150 offer back in the day when all that was required was a $1,500 minimum balance, 2 bill pays in 60 days, and an account open for only 6 months. Do check the minimum balance requirements and the fee schedule if you try to open one… I had the EZ Checking so the minimum was $1,500. It’s an easy way to earn extra money at no risk.

Affinity Bank has been offering this deal for over a year and a half and it’s a doozy of a deal. It’s never been on my radar screens because I don’t have any kids, but they’re willing to pay Kids Only Savings accounts 10% on the first $500 in their account. This deal has made its way to the Fatwallet Forums, where I originally read it, and onto a few blogs, after I did a search, but it looks like it’s probably going to be around a while. If you have any kids, there isn’t any reason why you wouldn’t jump at the chance to both earn an incredible interest rate (though not actually that much money) but, more importantly, teach your children fiscal responsibility at an early age.

If you have a child under the age of 16, they are eligible to open an account. You, as the custodian (and over 18), will need to open an account with Affinity too (Minimum deposit is $100 for Free Checking, $500 for Free Savings) too. As for your child’s account, the first $500 in the account will earn the promotional 10% APY interest rate but any amount above that will earn the standard Gold Savings rate which is small compared to ING Direct or FNBO Direct. The minimum deposit for the Kids Only Savings account is a mere $1.00. Now, with your account, if you opened a checking account and manage to have a recurring direct deposit - there’s a $75 bonus after 90 days.

As for taxes, the 1099-INT will be in your child’s Social Security Number so the tax burden should be nil unless your child earns more than $700 a year. If you’re children are still very young, you probably want to open it up just so you can get the easy $50 a year. But once they do get older and start to understand the concept of money, the account would be a great way to teach them about bank accounts, interest rates, and the basics of personal finance. The beauty of this offer is that your children will get 10% until they turn eighteen, despite the cutoff age for account opening is sixteen. As for how long this offer will be available, that’s up to Affinity.

Bankrate has a great article that details a generally understood concept by frugal shoppers. The article is title “Month-by-month guide for finding sales” (written by Laura Shanahan) and basically lists what items are typically on sale in which months, so you can plan your shopping accordingly. This is more specific than the classic “Buy winter clothes at the end of the winter season” or “Buy summer clothes at the end of summer.” Below I’ll just list the months and the bullet points she outlines in her article. I’ve omitted some of the strange sales that didn’t make sense to me.
S
January

• “White sale” items — sheets, pillowcases and other bedding accessories
• Computers
• Workout and sports gear
• Winter apparel - coats, gloves, etc.
• Televisions - as retailers gear up for the Super Bowl…

February - Driven by Valentine’s Day and Presidents’ Day sales.

• Jewelry
• Chocolates
• Fragrance, toiletries
• Resort and cruise apparel
• Furniture and housewares

March - Start of Spring

• Windbreakers, Raincoats

- prepare for April Showers!

• Gardening Tools
• Luggage
• Frozen Foods

- March is National Frozen Food Month

April - after Easter, Spring cleaning time

• “Spring finery”
• China
• Kosher foods
• Eggs (chocolate and chicken-laid)

- Easter!

• Wallpaper and paint

May - Memorial Day weekend sales

• Appliances
• BBQ and picnic gear
• Pre-season Summer Apparel sales

June

• Summer apparel
• Hardware, home fix-it tools, materials
• Dairy Foods

- June is National Dairy Month!

July

• Deeper discounts on summer apparel
• Air Conditioning

- These sales will last through September

• Appliances

- 4th of July sales!

• BBQ and picnic gear
• Craft supplies

- apparently July is well known as a great time to stock up.

August - The second time stores have “White sales,” school supplies are cheap now right before school starts.

• “White sale” items — sheets, pillowcases and other bedding accessories
• Outdoor furniture
• School supplise
• Pre-season sales on Fall Apparel
• Summer apparel clearances

September

• Homes

- Hrm… interesting.

• Deeper school supplies sales
• Canned goods

October - Halloween!

• Candy
• Cars

- End of the month as salespeople seek to meet quotas.

• Outdoor sports equipment

- with Winter looming…

November - Thanksgiving is here! Time to fatten up. Also remember Black Friday, the day after Thanksgiving.

• Fall apparel clearances, winter markdowns
• Blankets, comforters

- starting to get cold…

• Thanksgiving fixings

December - Almost everything giftable or eatable is on sale.

This guide was especially helpful for someone like myself, who doesn’t really know the best time to buy sheets or comforters, so I hope it’s useful for you too.

Everyone gets junk mail and basically everyone hates it. I’ve written in the past about how they’ve done studies that show there is a large enough percentage of respondents to make mailing all these junk offers worth it to the company so it’s about time we fought back.

(read full article…)

I’m batting 0 for 2 now, the offer on a second home (this one I wanted more than the last one) wasn’t accepted. The list price of the home was $275,000 and I offered $275,000 with an escalation clause up to $290,000 including a deposit of $2,000 (up from $1,000). One thing this home did teach me was the psychology of the seller and working harder to understand their motivations. I’ll explain what I mean…

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