incentives

5 Reasons Fall Is a Great Time to House Hunt

Mikey Rox — Mon, 12 Sep 2016 16:24:08 +0000

Spring and summer are prime seasons for buying and selling real estate. The weather is milder and more conducive for a move, and if you have kids, summer lets you settle into a new place before the little buggers head back to school. But while May to September are considered the best times of the year to buy a house, they aren't the only times. There's no need to stress or panic if you don't find what you're looking for before the end of summer, especially since fall is also a great time to house hunt. Here are five reasons why.

1. It's Easier to Negotiate With Sellers

Because spring and summer are the busiest seasons for real estate, some homes receive a ton of traffic, resulting in multiple offers from buyers. In some cases, multiple offers drive up the asking price of a property. This is good news for sellers, but not the best news for buyers looking to negotiate the price and get the best deal on a property.

The market typically slows down toward the end of summer and beginning of fall. Since there aren't as many people searching for properties around this time, this an excellent time to negotiate the price. Sellers who were unable to sell during the peak season might be willing to accept a lower price, which means you can get more house for your money. And if the seller is really motivated, you might negotiate additional incentives, such as a seller credit at closing that can go toward replacing the carpet, or the seller can pay all or a percentage of your closing costs to reduce your out-of-pocket expense.

2. There's Less Competition

A smaller pool of buyers also means less competition, so you can take your time and look for a property that's right for you and your family. When several buyers compete for the same property, there's a greater chance of the seller accepting another buyer's offer, or you can find yourself caught in the middle of a bidding war. There's the risk of falling in love with a house, only to be disappointed when you discover there are several other (maybe better) offers on the table. And when there's a lot of competition, there's a tendency to rush the buying process; you could end up purchasing a home and experiencing buyer's remorse later on.

3. You'll Experience a Shorter Wait to Benefit From Tax Breaks

One benefit of buying a home is the opportunity to take advantage of tax breaks. Homeowners can write off mortgage interest, private mortgage insurance premiums, and real estate property taxes, plus certain costs associated with getting the mortgage, such as discount points paid to a lender and loan origination fees. Self-employed people also can write off the square footage of a dedicated home office, as well as a percentage of utilities. All these expenses are written off when you file your tax return. The good thing about buying a home in the fall is that you don't have to wait as long to take advantage of these tax savings, which can trigger a bigger refund or a smaller tax bill.

4. Builders May Offer Additional Incentives

If you're thinking about purchasing a new-construction home, fall is one of the best times to house hunt because builders also experience a reduction in new home sales after summer. To spark interest, some builders offer incentives, such as a discount off the base price of certain models, or the builder may offer to pay all of a buyer's closing costs.

5. You'll Get More Attention From Your Realtor

Since the number of people looking for homes decreases in the fall, you can use this situation to your advantage and get more quality time with your realtor. During the spring and summer, your agent might juggle several clients simultaneously. Even if your agent is professional and looking out for your best interest, she isn't a robot. She might be unable to respond to calls or emails as quickly as you would like, and it can be difficult to coordinate your schedules for showings.

If you postpone house hunting until the fall, your real estate agent will likely have fewer clients. As a result, your agent can devote more time to your house hunting efforts. This includes searching and finding listings that are perfect for your family, coordinating showings, as well as answering your questions in a timely manner.

Have you searched for a home in the fall? Did you find it easier than other times of the year? Tell me about your home-searching experience in the comments below.

This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

11 Ways the Government Pays You to Live Green

Tim Lemke — Wed, 20 Jan 2016 16:00:03 +0000

Do you care about the planet? Do you care about saving money? Those ideas are not mutually exclusive.

If you are environmentally conscious, it's worth knowing that you can "live green" and get help from the government to do so. Federal, state, and local governments offer tax breaks, credits, and straight cash payments to people who keep an eye on their carbon footprints.

There is plenty of help available, and it's worth checking with the IRS and your state and local governments to see where you can save. Here are 11 big ways that governments will pay you to live green.

1. Cash for Burning Biomass

Forget the oil burner or electric heat pump. You can get government money by using a biomass stove, which burns things like wood, plants, grass, and even corn. There's a federal tax credit of up to $300 for stoves that use biomass, and some states have additional credits. (Maryland, for example, will rebate up to $700 for a new pellet burning stove.)

2. Tax Breaks for Electric Cars

Electric and hybrid vehicles are cool, but they often have a higher price tag than regular automobiles. So the federal government wants to help out by offering a tax credit of up to $7,500. Take that into account the next time you're eyeing a Tesla, Toyota Prius, or Nissan Leaf.

3. Incentives to Use Alternative Energy

There are are all kinds of incentives for you to electrify your home using something other than fossil fuels. There's a 30% federal tax credit for installing a geothermal heat pump, wind turbines, or solar panels, for example. There are also grant programs at the state and local level. The idea is that these credits will offset at least some of the relatively high cost of installing these systems, thus making it easier financially for homeowners to go green.

4. Money for a Home Energy Audit

There are some local governments that will give you cash just for an examination of how you use energy in your home. In most cases, you will get recommendations on ways to use less energy, but you can get the tax credit even if you don't make any changes. Takoma Park, MD offers $100 just to get the audit done.

5. Money for Windows, Doors, and Skylights

Sometimes getting new windows isn't just about making your house look pretty. If they exceed EnergyStar requirements for efficiency, you can get a tax credit of up to $500 on the cost. Good windows and doors can help keep out drafts and help heating and cooling systems work more efficiently. This credit also applies to new insulation and your roof.

6. Cash Back on Appliances

The federal government used to give credits for energy-efficient refrigerators and the like, but that's been phased out. However, there still may be localities that offer similar incentives for EnergyStar rated appliances. (See also: 13 Small Kitchen Appliances That Aren't Worth the Money)

7. Public Transit Subsidies

The federal government and some state governments encourage employers to offer a pre-tax benefit for workers who use public transportation to commute. Under the federal tax break, workers can reduce their taxable income by as much as $255 per month. The federal benefit also works for parking, so it's not entirely a "green" incentive. Some states (including California) allow workers to "cash-out" the parking benefit if they bike, walk, or carpool to work.

8. Bike-to-Work Incentives

The IRS allows employers to reimburse workers for up to $20 a month for expenses related to biking to work.

9. Tax Incentives for Your Home Office

The federal and state government want to make it easier for you to work from home. Many expenses related to having a home office, including equipment, furniture, and some utilities, can be tax deductible. In 2013, the IRS announced a "simplified" deduction that allows for up to $5 per square foot of space used as a home office (up to 300 square feet.) To qualify, you must have a space that is used "exclusively" for work.

10. Tax Deductions for Supporting National Parks

The National Park Service operates 59 parks, most of which are known for their natural beauty and prized by conservationists. If you're the type of person who likes to camp, hike, and climb, your donation to the National Park Foundation is tax-deductible. Additionally, the Park Service will offer free admission to parks on 16 dates in 2016.

11. Cash for Reclaimed Water

In many states, businesses can reduce their taxable income by using reclaimed wastewater, or so-called "greywater." And homeowners in states including Arizona can get a tax deduction on equipment to allow for recycled water usage. "Greywater" is generally not good to drink, but can be used for toilets, crop irrigation, and other non-potable uses.

Have you taken advantage of any of these eco incentives?

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This article is from Tim Lemke of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Score $240 a Year Doing This One Thing

Kim Owens — Wed, 14 Oct 2015 11:00:40 +0000

Zzzzzz. Oh, excuse me. I just made $240 in my sleep. What did I do — and what do you have to do? Here's the deal and my official disclaimer:

Deal: Open up an account with Santander Bank and they will pay you $20 a month ($240 a year).

Disclaimer: I am NOT an employee or a paid shill for Santander Bank. Just a frugalista who likes a good deal.

Get Your $20 a Month Bonus

1. Open an extra20 Account

Santander Bank has a lot of account options, so be sure that you choose the extra20 account to be eligible for the $20 monthly bonus. You'll be opening a checking account with just the necessary $25 deposit, and you get the bonus by enrolling in their direct deposit and BillPay options each month.

2. Use Their Automatic Direct Deposit and BillPay Feature Each Month

This is the core of the program — the reason you'll be earning your $20 bonus each month. You will receive $10 when you receive employer direct deposits totaling $1500 or more a month, and an additional $10 a month when you pay two monthly bills using their BillPay — for a total of $20 in passive income every month, or $240 a year. What counts as a direct deposit? From their website:

"Direct deposits include deposits made by the customer's employer or a federal or state government agency or retirement benefits administrator and generally payments made by corporations or other organizations. Direct deposits do not include deposits to an account that are made by an individual using online banking or an Internet payment provider such as PayPal."

3. Link an extra20 Savings Account to Your Checking Account

This actually happens automatically when you open your extra20 checking account because this is where Santander will deposit your bonus each month. The good news is that the amount to open and maintain it is low. All you need to open an extra20 savings account is $10 dollars.

Is It a Good Deal?

Personally, I think it's an awesome deal because my husband and I can fulfill the requirements without stressing about it, but everyone needs to examine their own situation to decide. If you can do it, I say go for it because where else can you basically get what amounts to $240 in interest a year from a bank? Not only that, while there is only one account allowed per person, there can be more than one account per household. That could mean $480 a year. Or if one person doesn't meet the deposit requirement, move it the other way. Open a joint account and have direct deposits going in from two people to get the bonus. It'll take a little bit of effort to set everything up initially, but either way, after that it's easy money.

Can It Really Be That Simple?

One person's simple can be another person's complicated, so having gone through the process, what I can say is that I found it to be straightforward. As long as you understand the bonus requirements, can follow directions (and keep all of the paperwork), and follow through on the requirements, you shouldn't have any problems. Here are some things to keep in mind.

1. You Can Open the Account Online or at a Physical Branch

I've opened accounts online before, but because I wasn't familiar with this bank, I appreciated being able to walk into a local branch and talk with someone about this deal. They have physical locations in Connecticut, Delaware, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, and Rhode Island.

2. Know Your Fees and Penalties

There is a $10 monthly fee which is waived as long as you direct deposit the minimum $1500 a month. There is no ATM fee as long as you use a Santander machine within the 50 states, D.C., and Puerto Rico. Non Santander ATM usage will cost you $3 per transaction. If you close your account within the first 90 days you will be charged a $25 early termination fee.

3. Know What Level of Customer Service You Want and Need

I've read some comments about poor customer service, but no more or less than the other big banks. If you need or want a lot of attention, maybe this isn't the ideal bank for you. For me it's fine as it is not my primary financial institution and it's easy to move money between the two, but each person has to decide.

4. It's Not a Limited Time Offer

Though I'm just getting around to it, this offer has been available for a few years and is not one of those limited time deals. This made me feel more comfortable finally pulling the trigger and going for it.

So there you have it, one easy way to make $240 a year in your sleep.

Disclosure: This is an honest review and recommendation. Neither I nor Wise Bread was paid for this placement — the link provided to Santander Bank is not an affiliate link.

Have you signed up for an account? If so, are you glad you did? Let me know about your experience in the comments.

This article is from Kim Owens of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Structure Merit Raises and Bonuses for Employees

Julie Rains — Wed, 25 Aug 2010 17:16:51 +0000

Link:

http://www.openforum.com/idea-hub/topics/money/article/how-to-structure-merit-ra...

Employee pay may not be a pressing concern for your business. If you think you have more urgent items on your agenda, then you may need to stop and reconsider.

But if you can project where your business is headed, how you'll know when you've arrived, and how you'll get there, then the task of leading your employees and rewarding them for their efforts should be natural.

Start with the basics

Create a job description for every position and each employee. Describe the scope of the employee's accountabilities and record tasks that the employee handles on a daily, weekly, monthly, quarterly, and yearly basis. If you're not sure what each employee does (and such a scenario is not uncommon in a fast-moving, decentralized company), then make observations or ask the employee to document duties.
Evaluate and plot your company's market position as an employer. As a business, you'll likely have a market niche; similarly, whether you like it or not, your company has a reputation as an employer. Decide how you'll excel: salaries, bonuses, health care coverage, lifestyle benefits, work/life balance, or some combination.

Consider how your employer niche will attract (or repel) certain types of people, and make decisions about salaries, wages, raises, and bonuses accordingly.

Develop goals and budgets

Decide what you want to accomplish as a company. Set overall goals. Then charge your leadership team with setting departmental and individual goals so that every group and each employee is working toward shared objectives.
Create a road map that specifies the paths that the company will take to reach its goals. Ask your managers to develop, present, get feedback on, and finalize annual performance plans for themselves and their employees. Start the goal-setting and planning process at least a couple of months before the start of a new year so that everyone is equipped to meet and exceed objectives.
Develop a compensation budget and set aside money for categories such as salaries, wages, benefits (health care, lifestyle, contributions to retirement plans, etc.) along with merit raises and bonuses. Establish a ceiling for merit raises (4 percent, for example) and budget that percentage increase of your current payroll expenses.
Determine the minimum level of financial performance that the company needs to reach before distributing bonuses. Figure out how much of the profits you're willing to give to employees. Devise a plan to set aside money throughout the year to fund bonuses.

Structure Merit Raises

Establish competency levels for each position. Define performance levels that meet expectations as well as those that fall short of and exceed expectations.
Set stretch goals that are measurable, observable, or both. Identify methods and timeframes for measuring or observing results. Make sure that these objectives cover more than just day-to-day duties at an average level of performance.
Structure individual goals so that the company's goals are being realized or can be achieved through collective effort.
Tell employees how they'll be evaluated. Show them the reports you'll use or the information that you'll pull from your business enterprise system to measure performance. Let them know the specific milestones they should reach by a certain time frame (a project completion or number of customer contacts by the end of the first quarter, for example).
Conduct annual performance reviews to discuss performance, but don't wait until the end of the year to bring up any problems. Check in periodically with employees or ask your managers to give feedback that corrects errant ways and encourages desired behaviors.
Give merit raises aligned with performance ratings. Be specific about the reasons that each employee earned an increase, linking improvements and results with growth in annual salaries or hourly wages. Let employees know that percentage increases are specific to each position, its accountabilities, and performance.

Create Bonus Program

Determine which positions are eligible for bonuses. These positions should be able to influence overall company profitability.
Set goals that directly link increased sales and profits to bonus structure. Consider creating tiers of bonus opportunities for greater and greater performance levels.
Communicate levels of performance that will qualify for bonuses if the company meets its financial goals.
Award bonuses at intervals appropriate for recognizing successes without jeopardizing the company's financial standing.

Stay the Course

Set an official policy that salary, wage, merit-raise, and bonus information is confidential. However, realize that employees may talk anyway, so be clear and specific about reasons that employees earned raises and bonuses. The more you link performance with pay increases and bonus opportunities, the more your highest performers will be motivated to excel.

Keeping the right people is critical to your success. Even more important is steering your business in the right direction, communicating plans to employees, and rewarding the employees who contribute to your success.

This article is from Julie Rains of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Will these car buying incentives get you to buy a new car?

Xin Lu — Wed, 01 Apr 2009 05:37:34 +0000

This week President Obama rolled out an initiative for the failing American automakers to restructure. The plan proposes several consumer incentives to jumpstart auto sales. Here are some details on the financial incentives you can expect if you buy a new car this year.

First, the government is picking up the tab on the warranties of General Motors and Chrysler cars if consumers were to buy a new car from these companies. Consumers have been wary of buying these cars since if the companies go bankrupt the warranties may not be honored. Now that problem is gone and these cars should be a little easier to sell.

Next, the federal stimulus package passed earlier this year already has a tax incentive for consumers who buy a car from February 16th to the end of the year. Basically, consumers can deduct the sales or excise taxes from purchasing a new car from their income taxes. In California this tax deduction can be quite significant since sales tax is 8% to 9%. In states with no sales tax this would not be so much of an incentive.

Finally, there are several "clunkers for cash" proposals going around Congress that allows consumers to trade in old or fuel inefficient cars for cash from the government. Essentially, the government is offering to buy crappy cars for more than what they are worth to encourage consumers to buy new fuel efficient cars. However, this proposal may cost the government billions of dollars per year and that money is yet to be found. President Obama seemed to be highly supportive of this plan and a similar program in Germany supposedly boosted auto sales by 20%.

Personally, I plan to drive my ten year old Honda Accord another ten to fifteen years because it is unnecessary to replace it despite the incentives. What do you think? How big of a financial bonus would you need to buy a new car in the current economic climate? If you were offered $3000 to $5000 for your "clunker", would you take it?

This article is from Xin Lu of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Incentive plans always go awry

Philip Brewer — Thu, 27 Mar 2008 18:04:00 +0000

Ever worked someplace that had an incentive plan (as in, "Hit these targets and you'll get a bonus")? Ever been a manager whose job it was to administer an incentive plan? Ever tried to create an incentive plan, hoping to get people to do more of what you want them to do? Here's a little tidbit for you: Incentive plans always go awry.

I don't mean to say that incentive plans don't work. They just never do what you want them to do. Here's why: They replace intrinsic motivation with extrinsic motivation.

Intrinsic and extrinsic motivation

Ever seen a kid try to learn how to do something he wants to be able to do? (For example, learn to beat a level on a video game or learn to jump a skateboard up onto a wall?) If so, you've seen intrinsic motivation. I've seen kids spend hours, doing the same thing over and over again, until they get it right. People offering bonuses have seen the same thing too. That kind of concentrated hard work is what they're trying to get, only they want it focused on their project.

They're never going to succeed, because only intrinsic motivation does that.

That's not to say that extrinsic motivation doesn't have an effect. Offer a bonus, and people will try to get the bonus. But observe: Their motivation is not to accomplish your goal--it's to "get the bonus."

Incentive programs and metrics

Any kind of incentive program has a metric--the thing that you're measuring to decide whether someone gets the bonus. For salesmen, it might be a target number of sales. For the quality-control guy, it might be keeping the number of bad units below some level. For a corporate executive, it might be some level of return on investment.

Whatever metric you pick, though, it will be something that can be gamed. A salesman can sell more units a dozen different ways:

He can stop pushing a single right-sized unit and start getting customers to buy two or three smaller units.
He can make aggressive use of financing to sell units to people who can't afford them.
He can stop providing support for his old customers and spend all his time chasing up sales to new customers.
He can make wink-and-nod deals to "sell" units with the understanding that they'll be returned next quarter.
He can kick back a fraction of his bonus to purchasing agents who buy what he's selling.

Now, the head office can thwart any of these moves. It can change the bonus metric from number of units to number of dollars in sales or number of dollars of profits. (Then the salesman puts all his effort into selling the most expensive or most profitable units.) It can delay credit for vendor-financed units until the bill gets paid. (Then the salesman stops using vendor financing even for customers where it makes sense.) It can mandate a certain amount of time spent supporting existing customers. (Measured how? Answer: According to some metric that the salesman can game just as easily.) In fact, it can spend all its time fiddling with the incentive plan, to the point where the head-office folks don't have time to do their own jobs--but nothing it can do will keep employees from gaming the metric, and nothing it can do will produce intrinsic motivation.

The point is that, under an incentive plan, everything is worse. Everybody's focused on the metric, and nobody's focused on doing the work that needs to get done.

Notice what the underlying assumption is: that the employees haven't already thought about what's best for the company and what's best for their customers. That their intrinsic motivation is something other than doing a good job. Some employers no doubt have plenty of disgruntled, unmotivated employees just there to pick up a paycheck for the least work they can get away with--but the answer to that problem is figuring out what's gone so terribly wrong with the business.

What to do instead

Whenever I point out that incentive plans make things worse, people always say, "But what should we do instead?"

Of course, just asking the question shows that you haven't grasped the essential point: Incentive plans make things worse. It's like whacking yourself on the foot with a hammer. The first thing to do is to stop. Once you've done that, you can focus on aligning employee's intrinsic motivation with the firm's business needs.

First, think for a minute about what people's intrinsic motivations are. My own experience is with software engineers. They're strongly motivated to:

do new, cool stuff with the latest technology
do work that's worth doing
gain the respect of their peers

Clever managers can use that to get employees to do what needs to get done. (For example, by making sure that every engineer gets to do some new, cool stuff, by not assigning pointless work and making sure that engineers understand why a task that might seem pointless is worth doing, and by making sure that everybody gets to see some of what their coworkers are doing.)

Most managers, though, have a different focus. They're too busy "managing" to have time to explain why the pointless work is worth doing--to them, it's worth doing because senior managers assigned it--and the new, cool projects go to key employees, because they're high-visibility, must-succeed projects and putting a junior engineer on it would be too risky.

With intrinsic motivations out of the picture, managers have to fill the gap with extrinsic motivations--praise, raises, promotions, and bonuses.

It's important to note that there's nothing wrong with any of these things--managers should lavish their employees with all of them. What's wrong is using them as an incentive. As soon as you do that, you've got your employees trying to hit the metric, rather than doing what needs to be done.

Minimizing the harm

Even though the harmful effects of incentive plans have been known for a long time, and the harm has been throughly documented--See for example, Punished By Rewards: The Trouble with Gold Stars, Incentive Plans, A's, Praise, and Other Bribes by Alfie Kohn--they haven't gone away. How then can we minimize the harm that they do?

For managers

First, remember that the harm is done by having an incentive tied to some metric. It does no harm to pay people for their work, nor does it do any harm to offer a bonus that isn't tied to an incentive plan. For example, a profit-sharing plan does no harm, and is often a good idea for everyone involved. (It means that the employer can lower payroll costs during bad times without having to lay people off or cut salaries.)

Second, if you have to have a metric, make it something that employees have no control over--total profits, for example. This will be de-motivating, of course--employees will be frustrated at having a bonus plan that's essentially a lottery ticket--but not as bad as if all your employees are spending their time trying to hit the metric.

Third, if you have a bonus tied to a metric, keep the bonus as small as possible. That way your employees can continue to follow their intrinsic motivations to do a good job without feeling like chumps for not gaming the bonus system.

Fourth, don't set your employees up to be competing against one another. You want your employees to be collaborating. Putting them in competition for a bonus is exactly the wrong thing to do.

Fifth, don't waste time trying to come up with a metric that your employees can't game. It's impossible. Unless their job is absolutely trivial, it will always be easier to maximize the metric than to do a good job. Any effort you put into creating a perfect metric is wasted effort.

To the greatest extent possible, though, avoid incentive plans. If your business has any kind of reasonable structure, your employee's intrinsic incentives are already aligned with the business's interests. (If they aren't--if your employee's natural inclinations to do work that's worth doing and to do it well doesn't lead them to do what you need done--then that might be a good place to focus your managerial efforts.)

For employees

I don't actually have much useful advice for employees suffering under an incentive program, except to try to find employers where the incentive programs are small and the target metrics are out of employee's control.

Really, your natural inclinations are going to be the right ones. If the bonus is small enough to be ignored, just ignore it and do your job. If the bonus is so large that you can't ignore it, put in whatever effort it takes to get the bonus, and then spend the rest of your time doing whatever you should have been doing. But you knew that already.

Everybody should read Alfie Kohn's Punished By Rewards. It will change the way you think about incentive plans--and change it for the better.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Did Office Max hire an accountant with an I.Q. of 62?

Paul Michael — Thu, 19 Jul 2007 21:50:41 +0000

I think I may be losing my grip on reality.

Recently I received four coupons in the mail from my local Office Max. Two coupons were for $10 off a purchase of $10. I'm not the best number-cruncher but I figured that meant I got two $10 items for free. I was right. I strolled into Office Max, picked out two $10 items (pack of batteries, paper supplies) and after tax the grand total came to around $1.40 for $20 worth of product.

"How on earth could Office Max benefit from this?" i pondered. "Perhaps people will come into the store and buy way more than $10 worth of stuff?" I then thought. Seemed like a reasonable conclusion to me.

Then, I get two more coupons from Office Max, each offering $15 off a $20 purchase IF I sign up for MaxPerks, their reward card. I wonder to myself why Office Max is so eager to get me back to the store, but I need a few more things so I return.

First, I buy a case for my external hard drive. Retail price $19.99. I hand over my coupon and the cashier doesn't even blink. He doesn't ask me to sign up for a form, he doesn't care that the coupon requires MaxPerks membership to be valid. I just get $15 deducted from the bill and walk away with a $20 item for just $5. "Could this happen again?" I once again wonder.

This is where the story gets even more strange.
I go back to the same Office Max store the next day and, armed with my coupon, pick out a microphone/headset combo for my computer. Retail price $19.99.

The cashier asks me if I'd like to buy an extended warranty on the $20 item. I laugh and say no. But then he says "Well, if you buy the $2.99 extended warranty I can give you a $10 coupon good for this purchase."

"Ah yes, but I'm already using a coupon" I honestly respond.

"Oh, that's ok, it still counts" he replies with a big grin. "But you'll need to grab a few things to bring the total up so that I can deduct the addtional voucher."

Dazed, I walk around the store trying to find something else I need and settle for a few packs of gum and some mints.

My grand total came to $25.40. After a lot of fiddling with the system, he duducted the $15 voucher and the $10 voucher, so I paid 40 cents for the whole purchase. And once again, I never even had to sign up for the MaxPerks card to get the discounts.

So, can anyone tell me what is going on with OfficeMax? Is the idea to make customers so amazingly happy that they'll come back and spend more money? I doubt I'll go back unless I get another voucher because generally I find Target has the things I need for a little less.

If anyone from OfficeMax corporate office can shed any light on this "give the store away for free" promotion, I'd love to hear about it, too. Because quite frankly, I can't see how this one turns a profit.

Super photo by Wiseacre . Thanks.

This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Why you can't trust a real estate agent.

Paul Michael — Thu, 05 Apr 2007 22:53:56 +0000

Surely a real estate agent would want to get you the very best price for your home. After all, they earn commission. The more they sell it for, the more they make, right? Well, the popular book Freakonomics , which I'm reading and devouring right now, proves this is not the case.

Now, I'm not saying all real estate agents are doing this, neither are the book's authors Steven D. Levitt and Stephen J. Dubner. But it does cast a huge shadow of doubt over the entire real estate industry. Judge for yourselves.

Here's the game, and how it's played.
It's all based on incentives...what's in it for you, what's in it for them. And it also plays on your fears. Fears that you don't know how to sell your home, that it will be on the market for years and that, of course, you won't get the best price. So, you call a real estate agent and use their huge knowledge of the market to sell your home quickly, easily and for the very best possible price.

And that's the sticking point.

Due to the way commission is structured, it's not in the real estate agent's best interests to get you the best price for you home. Let me repeat that...it is not their priority to get you the most money for your house.

No, they want a good price, but they want a quick sale. It is far more profitable to get you to take the first reasonable offer that comes along, than wait another week or two and get $310,000 instead of $300,000.

The incentive problem.

Let's looks at that more closely. At first it seems well worth the wait. Two weeks for $10k. For you, it is good. Of that $10k you get around $9400. The other $600, that's the 6% commission fee, gets split 3 ways. Half goes to the buyer's agent. Then the real estate agent gets $150 and her firm gets the other $150.

$150? For all that time and extra work? Not so great now, and you know, I'd feel the same way.

Just look at the numbers. It's simple math.

Sell the house now for $300k, make $18k commission and get $4500 cold hard cash.
Or, wait for two weeks or more, do a lot more hard work, sell for $310,000, and get $4650 cash.

It's clearly not worth the wait, when you could sell early and start work on another commission. This is the problem. Big incentive for you, tiny incentive for the expert. And the experts have many tricks up their sleeves to ensure a quick sale and easy ride.

The code words used in Real Estate ads.

There are good words, and bad words. Most of the time, you can make an educated guess.

Consider these terms when selling a home. Five are good, five bad. Could you tell which?

• fantastic
• granite
• spacious
• state-of-the-art
• !
• Corian
• charming
• maple
• great neighborhood
• gourmet

Well, here's the answer. The words in italics are good. Why? Because they say something positive and definite about the house. You may or may not like granite, but there's no denying the implication of rich and aspirational. The same goes for corian, maple, state-of-the-art and gourmet. Whatever you feel, you cannot deny the meaning.

Now look at the other words. Spacious? What does that mean? Is it impractical, badly laid out, cold, roomy, who knows? Charming is just as banal and ambiguous. And as a writer, I know that using anything like fantastic or ! means you have nothing of substance to say. When a house is fantastic, you don't have to say so....it sells itself. And great neighborhood basically means it's not the best house on the block.

When you know how to read the code, and it's not difficult to figure out, you know what the agent is trying to do. Through the use of this language, they're saying "this house isn't so hot...maybe you should make a lowball bid, it may just get accepted." And when a bid does come in that's lower than you'd like, hey guess what, you should take it. After all, that nicer home across the way hasn't sold yet and it's been on the market for months.

What happens when a real estate agent sells her own house?

That's when the data get's even more interesting. She'll use descriptive words that mean something. Terms like "move-in-condition" and "granite" will be on there. Ambiguous phrases like "immaculate" and "wonderful!" will not.

Studies performed by Levitt and colleague Chad Syverson also proved that real estate agents hold out for more money when they sell their own homes. Of the 100,000 home sales they looked at, real estate agents kept their homes on the market for 10 extra days and made 3.7% more money.

So, what next?

The Internet is your friend. Information that used to be at the disposal of the experts is now readily available. Do some homework. See what is selling, for how much and where. And don't let the real estate agent pressure you into taking a lower bid because the market is "just in a terrible state right now." As sure as night follows day, the same agent will tell a buyer "pay more, the market is really moving."

It's truly a cat and mouse game.

This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: