NUGGETS FOR THE NOGGIN
How Much Is Your Home Worth?
May Not Be As Much As You Think!
Article by: Jim “Gymbeaux” Brown, originally written October 31, 2013
DISCLAIMER OR CLAIMER: I have spent over 32 years in the real estate business as a salesperson and as a Broker/Manager and even owner who has taught real estate courses to real estate agents. This Nugget needs to get into the hands of homeowners more so than real estate agents for reasons that will become obvious as you read the Nugget.
I would always explain to the homeowners who selected me as their REALTOR® and to the many students in the real estate courses I taught that "a person's home is only worth what (1) a buyer is willing to pay for it; (2) a mortgage company is willing to lend to the buyer if the buyer is NOT paying cash; and (3) an appraiser can support based on sales of "similar" homes over the past 3 months."
What the homeowner paid for the home has nothing to do with its fair market value with the key word being "market". The market determines the value of real estate based on what has been selling. The value is not based on what someone paid for it, how much a seller "needs" to net on the sale or what Uncle Louie thinks the property is worth. The market determined value!
But wait...there is far more to determining value than what was just stated. Change directions for a moment. Put yourself behind the wheel of your car as the buyer of real estate, primarily residential real estate. You and your family, if you have a family, are out and about looking at neighborhoods and homes that are for sale. What do you see or what do you consciously look for and subconsciously see even though you may not realize that you are seeing it?
If you are like most people:
- You look for what the route to and the entrance into the various subdivisions look like. Are they attractive. Do you have to drive through commercial areas or areas that are not kept up to get to the home you may be interested in? If the answer is yes you are deducting value in the calculator in your head and you may not even be aware that you are doing it.
- Now you are in the neighborhood what do you see BEFORE you even get to the home you desire to see? Are the lawns and homes well kept or do you see lawns that need mowing, flowerbeds that need weeding, homes that need painting, boats, trailers and/or campers parked in the yards or in the driveways, homes with children's toys left lying about the yards, a lot of For Sale or For Rent signs (which would indicate that there may be problems in the area), commercial trucks parked at homes, cars or trucks up on blocks, cars or trucks obviously in a state of disrepair, or commercial business signs within a residential community. These are just some of the features of a neighborhood that a buyer typically sees BEFORE they see the home, repeat BEFORE.
- Now you are at the home you came to see, what do you see BEFORE you enter the home? Some of the above? Does the home need any obvious repairs like broken windows, broken or missing shutters or window screens, broken or damaged garage doors, doors needing painting or staining and finishing, and probably even more importantly, what the homes to the right, to the left and directly across the street look like.
As you can see, the decision to buy or not to buy may have been made before you even enter the home. That is what this Nugget is all about; not the actual home but the environment surrounding a home or property that you or a buyer may be interested in, or not. As an example, if every day as you leave your home you have to look at the neighbor's boat, trailer or camper parked right next to your home, you are not going to have a good visual experience. But over time the distraction becomes the "norm" and you ignore it. But a buyer looking at your home will not ignore it because it is the first time the buyer sees it and the buyer may consciously or subconsciously be ruling out your home before even entering it.
In short, YOUR NEIGHBORHOOD MATTERS! So the question I would ask homeowners is: Are you adding value to your NEIGHBORHOOD, let alone your own home, or are you detracting from the value of your home and the homes of your neighbors? It's referred to as:
PRIDE OF OWNERSHIP
Is the "pride of ownership" apparent in your neighborhood, or not?
If you own rental properties, how are you insuring that your tenants are properly maintaining the homes they rent from you? Do you realize that if the tenants are NOT maintaining your rental properties that the value of those properties is diminishing as well as the other homes in the same neighborhoods? How do you think those homeowners feel about YOU who have apparently left the decision to maintain or not maintain totally in the hands of the tenant without your periodic inspection?
I have shown homes where the buyers upon pulling up in front of the home that is for sale would refuse to even get out of the car because of the condition of the immediate neighborhood. I have had buyers who would race through a home being shown because of a lack of interest that started long before we arrived at the home. I know of one buyer who would park his car near the local schools early in the morning and late in the afternoon just to observe how the students were dressed, how they acted and how they arrived and departed the schools. This buyer was concerned for the welfare of his children and rightfully so.
Here is the rule:
YOUR HOME, YOUR NEIGHBORHOOD, AND YOUR ATTITIDE HAVE A DIRECT RELATIONSHIP TO THE VALUE OF YOUR HOME AND THE HOMES IN YOUR NEIGHBORHOOD!
HOW DO YOU MEASURE UP?