The Schmuck Test

I was speaking with a friend last night and we were discussing real estate, the current state of the market and current price points across various neighborhoods. We also got into the balance between the touchy feely stuff and quantitative analysis of residential single occupant units (a home). Now don't get me wrong, I can get all geeked out talking about charts and price trends and trying to predict where we are in any given cycle. But the other equally if not more important factor is the part about buying a home that is at a visceral level, more "this is it" than "rent versus buy ratio".

My problem a few years ago was purely "these prices are insane" rather than "I can't find a home I love". Because before this big enchilada exploded, my mortgage broker qualified me for a $600,000 dollar loan and I didn't have to show the lender a tax return...WTF!? Before you go what the hell were they going to buy in Manhattan for $600K; we were looking in Maplewood, NJ. So anyway, if someone was going to give me $600k no questions asked, I knew the shit was going to hit the fan sooner than later. That's when I thanked Buddha for having my offer on a shitbox craftsman, um...laughed at. In hindsight we were overpaying by $75k based on our 20% below ask bid, no one bid 20% below ask in 2007.
Now I know I'm not that smart and I'm even less lucky....guess I got lucky???

So back to the point here. Schmuck . So we kind of got into it a little bit, both agreed that charts and such are interesting and we both certainly do enjoy some good chart porn. But arriving at a fair value for a property is pretty easily done with careful analysis of recent comparable sales in the building and neighborhood. Then adjusting for variables such as maintenance fees/taxes, view, light, condition and building amenities etc...We also agreed that (some) homes were at a point that we would pull the trigger today and the touchy-feely stuff about buying a home mattered...a lot. 

But at the end of the day what it comes down to is we don't want to be a schmuck and drastically overpay(no matter how much we love the place!). We don't want to be at a dinner party telling people "the big news" and then get that look..."what a SCHMUCK", you payed what? To live where? That's five blocks from the projects for christs sake!! No one wants to hear that, especially right before dinner.  So now I am trying to figure out a way to create a Schmuck index and have a widget to go along with it.

If you have any ideas about how to formulate this "Schmuck" index please email me or leave a comment.