Saving $1000’s on your next home purchase? – Part II

I’m guessing many dear readers have been waiting day and night for the details on the money saving method mentioned in Part I, and some may have delayed their closing date. (OK, I’m being delusional that anyone even read Part I, much less believed it could be true.) Well, I wouldn’t spend those saved $1000’s before finishing the rest of this post.

Panhandle Holidays 2002

As it turns out, my friend was able to enact this transaction and actually did save the purported $1000’s mentioned in the original story using a little known discount called a reissue rate, which can save up to 50-60% of a full policy. This effectively involves using the existing owner’s insurance company to “reissue” the policy to the new owner. It makes sense that a discount would be in order since the insurance company has already done a significant portion of the work for the existing owner and won’t be starting from scratch. Many brokers won’t mention this due to existing relationships with certain title companies, and there’s no motivation for the insurance company to mention it either, so the catch is to know the discount exists and to ask for it.

In the end, the reissue method was adequate enough for my friend’s mortgage company to endorse the mortgage, but whether this is the case in all mortgage applications can only be determined on a case-by-case basis. As more of the deed and mortgage processes are handled by computers, the risk afforded by title insurance will continue to decrease, and it’s likely title insurance companies will have to look for other ways to generate revenue. That’s when we can really start saving.

Saving $1000’s on your next home purchase? – Part I

A friend was recently explaining how he saved thousands of dollars purchasing his new (yet previously-owned) home. Knowing there was a strong likelihood I would someday upgrade my own home, I listened intently to the story and was amazed by the simplicity.

Effectively, my friend described a loophole in the Texas title insurance system, where the owner’s previous title insurance company can sign over the title insurance to the new owner for a nominal fee ($100’s), which is much cheaper than purchasing new title insurance ($1000’s). The argument for this makes a lot of sense since most liens in Texas have to be registered with the state and easement issues in well-established neighborhoods are virtually nonexistent. Great, I thought to myself. I’ll use this in the future to save a few bucks, or at worst, it’ll make a great conversation piece at parties. Before any bragging rights could be claimed, I wanted to do a little research to verify the method.

The first person I mentioned this story to was a recently licensed real estate agent from my neighborhood. She began to explain why someone would be crazy to avoid purchasing title insurance, but I was still skeptical of this advice knowing she probably gets a cut of the insurance fee. This put my curiosity in a whirlwind, and after many additional conversations and a couple hours of research, the facts behind this fee-saving method have been uncovered. Stay tuned for an exciting second post explaining the particulars of this loophole. In the meantime, if you have any insight to offer on the subject, comments are welcome.

The Pillow Test

As a wise accountant once told me (i.e. my CPA mother), all financial decisions should be first weighed against one thing: The Pillow Test. What do bedding and money have in common you might be wondering at this point. I had the same question, when I first heard it, but after many years of managing my own personal finances, I have come to fully understand and appreciate its simplicity.

The Pillow Test is a simple measure of a person’s capacity for handling risk. Plainly put, if a new financial transaction is going to cause a person to lose sleep, the investment or venture is most likely not worth the time, regardless of its potential. This measure of one’s tolerance for risk is not only a litmus test for going into new transactions; it can also serve as a wake up call for getting out of transactions. In other words, if money woes are creating sleepless nights, it might be time to consider unwinding some financial risk, because the best test is how well you rest.

Identity Theft – Wow! It’s not a joke.

A friend was recently revealing his encounters with someone writing forged checks all over town with his bank account and driver’s license numbers. While identity theft seems like one of those media generated fear campaigns, it is a real occurrence, and until I had heard this real life incident, I hadn’t realized how easy it was for someone to get your information and how much of a pain it is to fix the problems. Granted, your bank or credit card company already has a plan to get your money back, but the real issue becomes spending days and days fixing your credit, filing police reports, and dealing with all the merchants who have turned your information into collections agencies. Based on the information gathered from my friend’s frustrating misfortunes, here are some simple changes I’ve already made or will be making in the near future.

  • Never write checks for anything. It’s hard to say ‘never’ on this one, but online checking will definitely be the preferred method for me as it already is for most reoccurring bills. The hard part will be paying cash or credit card for the variety of home services work such as home improvements or housecleaning, but as mentioned earlier, this inconvenience is relatively minor.
  • Never put anything with theft potential in an unlocked mailbox. This one is easy to say ‘never’ due to the number of convenient secure mailboxes located around any city. Fortunately, I have centralized security mailboxes in my neighborhood, but the friend mentioned above believes his home-based mailbox is how his checking account information was acquired. The police mentioned it is very common for thieves to check the unsecured, individual mailboxes outside of many homes.
  • Keep your driver’s license hidden as much as possible. Apparently, the state doesn’t consider driver’s license numbers as protected, and most likely, you won’t be able to get a new one if your identity is abused. Therefore, it’s up to each individual to secure their license, even though it can be acquired via the Internet with a little bit of work. This latter fact is why it’s so important to protect the other account numbers, because the combination of license and account is all that’s needed.
  • Lock information inside your home. This can range from buying a small safe or just keeping account numbers in a locked file cabinet. Leaving bank and credit card statements out is just asking for trouble from the various services groups (air conditioning, painting, housecleaning, etc.) that may be inside a house over the course of time.
  • Shred everything before trashing. Apparently, another sneaky way to acquire information is by digging through the trash, and since a small shredder is so cheap, there’s no reason to throw out any documents without being shredded.

Home window film to beat the heat

One of our recent house projects was aimed at dealing with the Central Texas sun. The key reason for this was a desire to get rid of the heat pockets around our windows when the sun was in its afternoon path. The options we considered were (1) new blinds, (2) solar screens, and (3) window film. After a lot of research, we decided that new blinds wouldn’t really help the situation, plus without some protection from the outside, the blinds would just continue to take a beating. After looking at several houses with solar screens, we could see that the screen material would start to sag rather quickly, and the almost black windows are not as visually pleasing from the outside as those with window film. (Obviously, this is just one opinion.) In addition, looking out through the solar screens does not provide as crisp of a view, so in the end we focused our attention on the window film.

The real question was does the film help with the heat, and the answer is emphatically ‘yes’. Here are a few specs on some of the various films we used. After having the film for a couple of weeks, there is a significant difference around the windows. While the specs say that 50-60% of the heat was blocked, my perception is that the air around the windows is 30-40% cooler, and the heat pockets throughout the house are virtually gone. In addition, when we arrive home at a time when the program is set high, the house is not unbearable, and my rough calculations say the house is 5-8 degrees cooler than it was prior to the film. That doesn’t sound like much but consider how long it takes for an air conditioner to drop the temperature that many degrees.

In the end, the cost was in the $1500 range for all the windows from Sunsational Solutions, and we were pleasantly surprised to receive a refund check from the city for making energy saving improvements, so the cost was reduced several hundred dollars. As an added bonus, the glare on the TVs throughout the house has been decreased to a point that is it not noticeable; consequently, HD looks just that much better. Here are a few pictures I took to compare the differences.

Window without any film or screen. (They missed this one but will be coming back to get it.)

Window without film

Window with solar screens. (The neighbor’s house…)

Window with solar screens

Window with film. (Subtle contrast with the stone…)

Window with film

Not a review of ‘True to Our Roots’

While I was incredibly impressed with True to Our Roots: Fermenting a Business Revolution, I’ll spare all readers with another review of the content that can be had somewhere else. Instead, it’s much more beneficial to comment on an aspect that the author just touches in a few places but doesn’t seem to emphasize. To give a bit of background, the story is written by the CEO of Fetzer Vineyards, Paul Dolan, who helped transform the vineyard and a large part of the California wine industry into a ‘environmentally and socially conscious’ industry. While doing this, he grew the company at double digit earnings increases for ten or so years, and now, he is promoting this sort of change in corporate business policy to all companies and industries.

Dolan’s sale to the corporate world seems to be based more on the moral and socially responsible aspects of making these changes to business, but he doesn’t seem to accentuate the aspects that might have a bigger impact in converting the CEOs of the world, such as increased sales and higher profits margins. Here are some of the advantages I see from adopting the Fetzer philosophy, if the philosophy alone isn’t reason enough.

1) Employees that are motivated by more than money will work harder, work for less, and enjoy working much more.
2) Consumers will prefer an earth-friendly product over the contrary at the same price point, and in many cases, consumers will pay a premium for these products.
3) Consumers prefer purchasing products from companies with happy employees.
4) Companies that engage in these practices are often publicly awarded for making strides in environmental and social change.
5) In many cases, converting operations to an environmentally sound approach can lower operating costs over the long term.

CxO interpretation: lower costs, increased sales, higher productivity per employee, less employee turnover, free viral marketing, increased brand awareness

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