Consumer Focused Carnival of Real Estate

The guidelines for this carnival.

As always, I arranged the entries that met guidelines into three levels, based upon originality, usefulness to the consumer, and how much thought and effort and research went into an entry.

STRONGLY RECOMMENDED

Despite misinformation about deferred annuities, I'm going to give a strong recommendation to The Good, The Bad, and The Reverse Mortgage. The author doesn't know nearly as much about deferred annuities as they think they do. For instance, NASD rules explicitly prohibit investing with borrowed money, so only a fixed deferred annuity is possible. The so-called "Equity Indexed Annuity" is the prime culprit in these schemes, and there have been recent rulings making those substantially more difficult to sell without an NASD license that puts the seller under the purview of NASD rules. Any of these instruments can still be annuitized without penalty, so the money is not out of reach. I could go on, but the primary thing here is the reverse mortgage - on which I agree completely. If you think you have a need the reverse mortgage, you are so much better off "swapping down" or even just selling completely that I have yet to find a scenario where a reverse mortgage makes financial sense for the client. Selling the family home, that your kids grew up in, can be emotionally difficult, I know. However, RAMs are costly, high interest rate loans, and the numbers speak eloquently against them. But since they're high commission products also, people interested only in a commission check will try to sell them - and they're often not telling "The truth, the whole truth, and nothing but the truth." I have in the past made jokes along these lines

Q: How do you know someone trying to sell a RAM is an unethical shark selling an overpriced worthless product?

A: By the fact that they're trying to sell a RAM!

I have yet to see any exceptions. However, there's an eventual bright side to the whole equation. Demographic trends are looking likely to hurt lenders who do RAMs worse than ordinary subprime mortgage companies' worst nightmares. The whole RAM industry is starting to look like a Ponzi scheme, at least in my opinion. I'm not exactly a member of the Council of Economic Advisers. But when numbers calculated on a ten to fifteen year remaining life expectancy start encountering a 25 to 30 year remaining life expectancy paired with long term care expenses so the mortgagees max out the draw, the ability to make a profit in the industry is going to be closely correlated with the ability to find a bigger fool to buy the note.

Your host presents Real Estate and the Four Levels of Competence

RECOMMENDED

Personal Financier has an article on Understanding Important Hidden Psychological Aspects of Rent vs. Buy Comparisons. It's a little older than I like to see, but I do think it's worth reading. He overstates his case a little - it is sufficient that the properties be functionally equivalent.

Tallahassee Real Estate Blog submitted Rent Versus Ownership - A Tallahassee Real Estate Case Study. Unlike most of the country, the rent there more than covers ownership costs. He neglects a few variables, but it shows just how easy the question gets when rent covers mortgage.

Salt Lake Real Estate Blog submits New Loan Limits - Are There Strings Attached? having to do with underwriting standards on the new "Jumbo conforming" loans from Fannie and Freddie. I have some email from some wholesalers that I haven't had a chance to write an article on yet, but reading between the lines of what Fannie is saying, I get the strong impression they do not want to fund these loans and will be pretty hardnosed about their requirements.

MET GUIDELINES

Paying Off Your Mortgage is basically a good article that makes one major mistake (market timing is a matter of luck, not skill - as any number of studies have shown) and does get way too commercial with what are probably paid links, including to applications to a money merge account that wastes your money. On the other hand, even with the mandatory deductions, I think it meets the guidelines..

The Foreclosure Crisis Continues from the Tri-State Better Business Bureau doesn't really give any useful information. But it does meet guidelines.

SPAM AND OTHER RIDICULOUS SUBMISSIONS

A site named "Life. Money. Development." submitted "Diet Tips for Preventing High Cholesterol Levels" How this relates to real estate is a mystery to me. Gotta watch that lead paint, and those old asbestos tiles are murder. Maybe he should add "Illiteracy" to the title of his site.

A site named 401 Lookup submitted an article called "A Close Look at 401k Retirement Plan - How It Works, Contributions, Withdrawals, Advantages/Disadvantages". Since they don't understand elementary written guidelines, it's not surprising that they're full of fecal matter on 401ks as well. Please people, don't believe everything you read on the internet. This is the sort of article a C minus high school student would write - including about a third of it being errors and glaring omissions.

A site called Public Flirt wanted me to link an article called "How to Use Compliments With Women". So they'll offer more for your property? So they'll let you have it for less? Sadly, no. Public Flirt was too busy flirting with women to read the guidelines for the carnival. Not to disparage the skill, the pasttime, or the intended end result, but it has nothing to do with the subject matter here. Let's all refrain from the obvious sexist comments, and hope that they keep to their red light district in the future.

KC Lau's Money Tips seems unclear on the concept of the "Consumer Focused Carnival of Real Estate," submitting a post about how inflation is bad with no consideration of real estate. For instance, considered strictly on its own, inflation is a good thing for a homeowner with a fixed rate mortgage, and still mostly good even if the interest rate on their loan isn't completely fixed. Inflation is one of those two-edged swords - a winner for every loser. I'd be extremely leery about following the money advice of someone who doesn't understand that.

Celebrity News and Gossip can't read guidelines either, submitting a vapid article about celebrity homes. While it did mention real estate, it had nothing to do with consumers, gave no information about actual real estate, had zero educational value, and just plain had no value unless you're one those folks who keep paparazzi in business. When aiming for the lowest common denominator, be prepared for the occasional division by zero.

I have been far too kind to some sites in the past, who submitted not only spam but something that was merely rejected, and so I let the spam slide. American Consumer News is one of those sites. Well, Mr. Nice Guy is over. 'How To "Go Green" And Mean It' doesn't even mention real estate. Their brains must have gone green some time ago, oozing out their ears and forming a slime pool for them to slip on the floor. Laying such a trap must be the best way for the zombies who evidently write for the site to catch prey ("More brains!"). Luckily for the rest of us, the zombies are more likely to slip on the slime than we are. From what I've seen of this site's expertise on subjects where I have professional knowledge, I wouldn't trust their writing on anything.

For those who might object to the treatment their submission received, the relevant information has been in the guidelines since before submissions were being accepted for this carnival. Having been told to read the guidelines, you willingly submitted these posts. Live with it.

Consumer Focused Carnival of Real Estate will return in two weeks (March 26th, 2008), here at Searchlight Crusade, unless someone else wants to host. Deadline for submissions will be March 24th.