20/20 Report with some interesting facts about the market, looming recession and trying to sell your house.


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by Sean McAlister

The Basics about Land Contracts

Land contracts are sometimes used by buyers who do not qualify for conventional mortgage loans offered by traditional lending institutional, for reasons of poor credit or an insufficient down payment. The legal status of land contracts varies from region to region. Typical land contracts are easy to understand and usually only make up 3-5 pages. Land contracts are common throughout the United States.

Buyers
Buyers are less likely to walk away from a land contract or stop paying on the installment sale contract if the buyer has made a big down payment. Often times, home buyers are in a financial position to afford the monthly payments associated with home ownership, but they lack the down payment necessary to purchase a home. In those cases, it often makes sense for the buyers to consider purchasing a home or piece of real estate and have the owner/seller provide the financing for the purchase.

Property

The owner-carried financing can include an existing mortgage balance or the property can be free and clear. Upon payment in full, the Vendor hands the Vendee a deed to the property. The basic difference between a land contract and a mortgage is the buyer does not receive a deed or clear title to the property until the land contract is paid off. The company can then make the tax payments to your property assessor and you can be assured the taxes will be paid on time. Consider including an acceleration clause in the contract, which will allow you to make the Vendee refinance the property if the condition of the property becomes a risk to your financial investment. This property may be improved or unimproved, vacant, or a home or a commercial building. With a land contract, a down payment is usually made, then equal monthly installments are paid until the property is paid for or until a balloon payment is required.

Selling

Likewise, selling a home by way a land contract can prove beneficial to the seller in many ways. In some states, they are called Trust Deeds, Contract for Deed, Deeds of Trust, Notes, or (privately held) Mortgages, but they all represent the same thing: a way of selling property where the buyer "borrows" from or relies upon the seller for the financing rather than paying cash up front or borrowing from a bank.

Land contracts vary widely from transaction to transaction. Land contracts are often misunderstood and are frequently avoided in favor of other less preferred ways of buying & selling real estate. I recommend the following information on Land contacts

by Sean McAlister

Why are most products that I see priced with the number 7 in them?
(especially in INternet Marketing)

$7
$37
$47
$197

I know that there are psychologies with various pricing methods but where and when did the number 7 replace the number 9 for instance.

I also know that there are a number of urban legends have grown up around the number 7±2. Could this be why?

In general, memory span for verbal contents (digits, letters, words, etc.) strongly depends on the time it takes to speak the contents aloud, and on the lexical status of the contents (i.e., whether the contents are words known to the person or not. Seven is the smallest positive integer requiring more than one syllable in English.

Now I realize that this report is a bit dated it still spurs further
curiosity...

According to a 1997 study published in the Marketing Bulletin, approximately 60% of prices in advertising material ended in the digit 9, 30% ended in the digit 5, 7% ended in the digit 0 and the remaining seven digits combined accounted for only slightly over 3% of prices evaluated.

Which mix was the number 7 in?

In a traditional cash transaction, fractional pricing imposes intangible costs on the vendor (printing fractional prices), the cashier (producing awkward change) and the customer (stowing the change). These factors have become less relevant with the increased use of checks, credit and debit cards and other forms of currency-free exchange.

Now that many customers are used to odd pricing, high-end retailers such as Nordstrom psychologically-price in even numbers in an attempt to reinforce their brand image of quality and sophistication.

So are most of the products at the xx7 price tag perceived as a lesser value?

Kenneth Wisniewski and Robert Blattberg at the University of Chicago's Center for Research in Marketing showed that when the price of margarine was lowered from 89 cents to 71 cents, sales volume increased a mere 65%, but when it was lowered from 89 to 69 cents, sales volume increased by 222%. In another study, the perceived value of all the numbers between 1 and 100 were studied, and 77 was shown to have the lowest perceived value relative to its actual value

Schindler & Kibarian (1996) tested odd pricing using three versions of a direct mail catalog for women's clothing. The catalogs were identical except for the prices, which ended with 00, 99, or 88. The version with prices ending in 99 generated 8% more sales volume and had more purchasers than the 00-ending version. The 88-ending catalog produced a similar sales volume and number of purchasers to the 00-ending version.

Pricing involves asking questions like:

How much to charge for a product or service? This question is a typical starting point for discussions about pricing, however, a better question for a vendor to ask is

- How much do customers value the products, services, and other intangibles that the vendor provides.

What are the pricing objectives?

Do we use profit maximization pricing?

How to set the price?:
(cost-plus pricing, demand based or value-based pricing, rate of return pricing, or competitor indexing)

Should there be a single price or multiple pricing?

Should prices change in various geographical areas, referred to as zone pricing?

Should there be quantity discounts?

What prices are competitors charging?

Do you use a price skimming strategy or a penetration pricing strategy?

What image do you want the price to convey?

Do you use psychological pricing?

How important are customer price sensitivity (e.g. "sticker shock") and elasticity issues?

Can real-time pricing be used?

Is price discrimination or yield management appropriate?

Are there legal restrictions on retail price maintenance, price collusion, or price discrimination?

Do price points already exist for the product category?

How flexible can we be in pricing? :

The more competitive the industry, the less flexibility we have. The price floor is determined by production factors like costs (often only variable costs are taken into account), economies of scale, marginal cost, and degree of operating leverage.

The price ceiling is determined by demand factors like price elasticity and price points.

Are there transfer pricing considerations?

What is the chance of getting involved in a price war?

How visible should the price be?
- Should the price be neutral? (ie.: not an important differentiating factor), should it be highly visible? (to help promote a low priced economy product, or to reinforce the prestige image of a quality product), or should it be hidden? (so as to allow marketers to generate interest in the product unhindered by price considerations).

Are there joint product pricing considerations?
What are the non-price costs of purchasing the product? (eg.: travel time to the store, wait time in the store, dissagreeable elements associated with the product purchase - dentist -> pain, fishmarket -> smells)

What sort of payments should be accepted? (cash, check, credit card, barter) Pricing Process of determining what a company will receive in exchange for its products.

A well chosen price should do three things :

1. Achieve the financial goals of the firm (eg.: profitability)

2. Fit the realities of the marketplace (will customers buy at that price?)

3. Support a product's positioning and be consistent with the other
variables in the marketing mix.

-Price is influenced by the type of distribution channel used, the type of promotions used, and the quality of the product price will usually need to be relatively high if manufacturing is expensive, distribution is exclusive, and the product is supported by extensive advertising and promotional campaigns.
-A low price can be a viable substitute for product quality, effective promotions, or an energetic selling effort by distributors

-From the marketers point of view, an efficient price is a price that is very close to the maximum that customers are prepared to pay.

-In economic terms, it is a price that shifts most of the consumer surplus to the producer.

I am unsure as to what the difference between 37 and 36 dollars for a product is but if you are offering a good quality product wouldn't $39.00 be a better price?



Sean McAlister

by: Sean McAlister

Here some tips if you are wanting to Flip Houses (Buy a house fix it up and then Resell it for profit)

If you are into real estate investing then you more than likely have been thinking about the idea of buying and selling houses. I have been doing it for quite some time and here are some tips for you.

1. If you know nothing about construction then I HIGHLY recommend you hire a General Contractor ( GC ). A reputable contractor will meet you onsite and look at the subject property. You should be able to get some estimates of repair. Make sure he/she is licensed and insured. Get a copy of his contractors license. Absolutly DO NOT try to go into it thinking you get everything done yourself in 4 weeks on a budget of $10,000.00

2. When arranging your financing with a lender ask for an interest only loan for 1 year. Your payments will be lower. If for some reason it takes longer than a year to sell the house you can sign for another year. Make sure you confirm this with your bank.

3. Make sure that you figure your carrying costs into your loan. By doing this you will have financed the payments and be able to draw from the bank when a payment is due. The amount of payments you can include will vary depending on the Loan to Value (LTV)

This will keep you from going out of pocket for a few months. Hopefully the property will sell.

3. When you have received the estimate from the contractor add about 3-5% to it. I am not suggesting that your contractor is trying to scam you. The fact is all budgets (when flipping houses) run over. So count on it up front so you are not surprised in the end.

4. Call your insurance company get the premium amount and add those numbers into your loan. When the payment is due draw from the loan.

5. Make sure you figure in utility expenses. Take into consideration the season and the type of utilities the property has. You may need to add more or less depending.

6. Strongly evaluate the market in which you are investing. Do your homework and see what other properties are selling for. Too many times I see people get into this business, not figure in all that there is and then try to sell for more because they are over budget. Have all your numbers together.

7. Go to the job EVERYDAY or at least every other day. If you do not have time to do this ...then do not flip houses. Whether you are doing the work or a GC, the project will go more smoothly, closer to budget and be completed on time. If you are using a GC this is imperative. He or she will need your opinion daily.

8. Always install new appliances.

9. Pick out all of your colors out before you start. Write them all down and make sure your GC has a copy. This is crucial to getting the job done on time. If anything needs special ordered you will know it upfront. Not to mention if you have to be unavailable for some sort of emergency...everyone can still keep working.

10. Allow a reasonable time frame. Take into consideration holidays and weather. Do not kid yourself. Be realistic. Don't expect anyone to work on Christmas day unless you are.

I have had good flips and bad ones. Every flip has had a surprise. With my most recent one I encountered over 200 bats in the roof. It cost me $1,800 to have them removed and I did not have that expense figured into the budget.

Have you ever flipped a house. If so please share.

To your success,
Sean

Hello Everyone,

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To your success,
Sean