ARE YOU AN
ASSET OR A LIABILITY?
By
Jim “Gymbeaux” Brown, May 7, 2025
I have wanted to write this Nugget
for a very long time. Recent
observations of my personal environment have clearly shown that such a Nugget
is both necessary and very financially important to any homeowner in any
location. The problem becomes how to
disseminate the information to as many people as possible. By the time I complete this Nugget, I feel
confident that I will have learned how to create the Nugget, save it to a file
that has a URL address attached, other than my Blog address, thus enabling
anyone to simply share the URL address (or my Blog Address) for others to gain
access, assuming you the reader, find the information valuable enough to
share. I am confident that if you own a
home or if you are considering buying one, you WILL find it valuable
enough to share.
Background. I am a retired real estate Broker,
Broker/Owner, Office Manager, Real Estate Trainer, Broker Sales Associate and
Sales Associate with more than 33 years in the real estate business. Does that mean I have all the answers? Absolutely not, no one really does because
like any industry or business, the basics of real estate continually change. Having said that, I think it is important for
the reader to understand that I listed and sold primarily residential real
estate. I did some commercial real
estate but that was not my normal field of expertise.
The MOST IMPORTANT aspect of
real estate is that real estate is a financial asset or a financial
liability. There is very little room
in the middle, it is typically one or the other. Since you are reading this, it would be safe
to assume that you have either purchased a home to reside in, purchased a home
to lease out or you are about to purchase a home for one of those two
reasons. By comparison, people deposit
money into a bank accounts, buy stocks, or precious metals or look for viable
investments to hopefully realize that their investments/purchases continue to
grow in value over time. In other words,
they want their money to make money! PERIOD! I can’t imagine anyone buying real estate for
any other reason. Even a person(s) who
buys a home for pure delight in living in the home, eventually will either sell
the property or the property will be included within the person’s estate and
willed to the next of kin. Either way,
the goal would or should be for the property/investment to increase in value
either for the owner(s) or their next of kin’s benefit.
Now for the ONE VERY BIG
QUESTION that ONLY YOU can answer.
Are YOU PERSONALLY an ASSET or are YOU PERSONALLY a
LIABILITY? An asset presumes
value; a liability presumes an expense or a cost! Asked another way, do you and your
property add value to the community or do you and your property detract from
the value of the community? There is
no in between! You are either one or the
other! The sooner you realize this, the
quicker it will become obvious to you that once you buy a home, for whatever
reason, you want it to increase in value, not decrease.
Here’s the rub, so to speak. Unless you live on a very large parcel of
land, a homeowner’s home value is almost exclusively valued at what the
neighbor’s homes have sold for or their perceived “worth” within a defined area. By worth, I am not saying what someone is
“asking” for the home when they put it on the market; that number is almost
meaningless. The worth of a piece of
real estate is only worth what (1) a buyer feels its value to be, (2) a real
estate appraiser can appraise it at or higher than the agreed to sales price
and (3) a bank or mortgage company is willing to loan money using the home as
collateral for the bank/mortgage company.
Home inspections done by professional home inspectors can also affect
the value of a home should the home require significant improvements. A homeowner can sell a property in need of
repair but the price should reflect those needs and how those repairs are going
to be made or not made.
With all that said, let’s delve
into the value of a single home and how the neighbors can significantly affect
that value either in a positive way or a negative way. The best way to approach this is through the
eyes of a real estate agent who is about to meet with the owners to list the
property for sale.
As a Listing Agent, someone hired
to place a home on the market for sale, I followed a routine BEFORE I
ever met with the homeowners. First, I
did a lot of homework at the office.
I already knew where the home was located and I could easily find what professionals
refer to as “comps”, meaning comparable homes and also comparable homes that
have SOLD! The SOLD
value is the only value that has tangible meaning in real estate sales. The asking price is more of price someone is
“hoping” to receive as compared to the price they “actually” receive. As Dr. John Maxwell oftentimes says, “Hope
is NOT an effective strategy!”
With my research in hand, the next
step is where “the rubber meets the road”, so to speak. By that I mean a homeowner is considering
hiring me to sell their home. Not all
real estate agents are the same and it is important to understand this if you
are a homeowner or hope to become a homeowner.
Therefore, with research in hand, I would drive to the property and that
is where I take the stage, seriously, making a presentation to the homeowner is
exactly like a tryout or audition for a theatrical play, a position in a band
or a job interview. You are about to be
interviewed for a job.
I typically parked in front of the
home, ON THE STREET. I try to
picture another real estate agent bringing their buyers to see my listing
(home) for the very first time.
Where would that agent and potential buyer park. THAT IS WHERE I PARK. I want to experience the exact same
“feelings” that a potential buyer would have on their FIRST VISIT to my
listing. That is so critical for a
homeowner to understand. Once I get out
of my car, I am pretty sure that the homeowners are beginning to watch what I
do; wouldn’t you? When you go on a job
interview, you are oftentimes being watched by people like the office
receptionist and he or she is taking notes on how you handle yourself. Being a real estate agent is no
different. The sellers are taking mental
notes on everything I do. I did
everything for a reason and that is critical to understand.
I take out a note pad. I look at the home as a buyer would look at
it for the first time. I take
notes on anything that draws my attention.
That would be the GOOD, the BAD and the UGLY and
oftentimes I do mean UGLY. The
next step is critical for the homeowner to understand and eventually I will
tell them exactly what I had done and why.
I look at the properties to the left of the home. Then to the properties to the right of the
home. Then to the properties across the
street. This obviously would not apply
if I were about to list a home in the country. so you learn to adapt to each
home you are about to list but the procedure’s goals are the same.
I understand that a home is unique
to the homeowner and most homeowners feel no other home is quite like theirs;
they may be right but more often than not, they are wrong. There are a lot of homes very similar to
theirs and a good appraiser will find all of them to justify a value that the
appraiser puts on the home being sold.
As I look up and down the street, what am I looking for? RED FLAGS! What is a red flag you ask? A neighbor who obviously fails to cut their
grass, prune their trees and bushes, leaves garbage cans and children’s toys
out in the yard. Cars that appear to be
abandoned or in need of severe attention.
Travel trailers or boats parked in the driveway(s). Recently I witnessed a very large fishing boat
parked on a street that had parts of the boat trailer that extended into the
next lane on a two-lane residential neighborhood. Why are all of these things important? Put yourself in the car of your real estate
agent and as you approach the home to be shown to you. If you are like most buyers, you begin to
notice any or all of the things I just described. What is your initial reaction? Will you have a favorable reaction (asset) or
a negative one (liability)? If your
reaction is negative, you may decide to just skip the showing and move on to look
at different homes in different locations.
This is precisely how your neighbors’ homes can adversely affect the
salability of YOUR home and you are NOT going to like it. Until YOU decide to put YOUR
home on the market, you may or may not have even considered such things and by
the time you do, it may already be too late to take corrective actions.
In addition to looking left and
right and across the street, I take even more notes as I approach the front
door. What is my initial impression of
the main entrance to the home? Is it
clean and welcoming or does the door and the surrounding area need painting or
cleanup? It makes a huge
difference. YOU GET ONLY ONE
CHANCE TO MAKE A FAVORABLE FIRST IMPRESSION. It is my job to teach the homeowner the
importance of knowing how a buyer thinks and how a buyer buys. Failure to understand this and failure on the
part of the homeowners to make necessary changes, may result in (1) the home
not selling or not selling as fast as the homeowners need it to sell and even
more importantly (2) the For Sale value will be lowered, meaning the net return
to the homeowners will be less than desired.
Once a homeowner begins to lower an asking price for their home, other
real estate agents take note and what the price lowering signals to them is
that the homeowner is either getting desperate OR the homeowners have tome to
their senses and have decided to price the home where the price should have
been in the first place. Either way,
lowering a price sends a signal that the homeowners are willing to “deal.”
I had one KILLER QUESTION I
would ask every homeowner that I interviewed.
“Do you want me to tell you the truth or do you want me to tell
you what you want to hear?” I
meant every word of that and for good reason.
Every time I asked the question; homeowners seemed shocked at the
question and ask why I would ask such a thing.
They always said they wanted me to tell them the truth; of course that
is what they should say. I then
explained to them that the truth is oftentimes very uncomfortable. I also explained that if we ever reached an
impasse on the sale of the property, it quite often will be that failure to
understanding the truth is why the property has not sold. I would explain that should that time ever
arise, I will tell them as much and we can agree that maybe I am not the person
they need to sell their home. I tell
them that I would prefer to part as friends than to remain in their employment
as enemies. In almost every occasion,
they understood and agreed. As blunt as
that may sound to some people, it was extremely important to me.
Once I passed this hurdle, I would
ask the homeowners to act like a real estate agent and show me their home. I would take notes, a lot of notes. I used the notes to develop advertisements
that would draw attention to the wonderful benefits and features of the home;
hopefully features that typically do not exist in other homes that would be
their competition. I wanted to discover
what the “points of difference” this home had over all of it competing homes. I would then ask two more very intriguing
questions. As we walked through each
room, I would ask, “What do you like best about this room?” Then I would ask, “What do you like
least about this room?” Why
would I ask these questions? Because
they will tell me what the selling points of the home are and they would also
tell me what might be holding buyers back from purchasing the home. If the homeowner doesn’t’ like something in
the home, chances are the buyers won’t either.
Then comes the real question that
can destroy the value of a home. “Mr.
& Mrs. Seller, I must ask this question.
Given that the neighbor’s home(s), (give its location), seems like the
owners have no desire to take care of their yard (remove the abandoned car or
relocate the boat or travel trailer), if YOU were looking at homes to
buy in this area, how would you feel about that particular home (or homes) when
you look at YOUR home? Would you
want to buy in this area? If the homeowners
are honest, they would probably say no. That
is exactly how your neighbors’ homes can and do affect the sales value of YOUR
home.
EVERY HOME HAS A PRICE AT WHICH IT
WILL SELL!!! EVERY ONE!
It might be falling down on all sides and the roof may be peeling away
but it still has a price that it will sell for.
However, the more items that I can find or should find that require
attention or fixing, the lower the sales price will be unless they are
fixed. It all starts with the front yard
and the front door. From there the next
most important rooms, believe it or not, are the kitchen and the
bathrooms. Cleanliness is critical.
Not only of YOUR home but also
your neighbors’ homes. Little things can quickly add up to big intrusive
things. The more a buyer feels that they
will have to fix once they move in, the less likely they are to even make an
offer UNLESS the price reflects the actual condition of the home.
Here is the reason I wanted to
write this Nugget. A new buyer cannot
cut the neighbor’s grass. A new buyer
cannot remove an abandoned car or pick up the toys in neighboring yards. As neighborhoods become older, they tend to
change. Needed repairs seem to be more
needed than ever before. Aging homeowners
may or may not be physically capable of cleaning up and maintaining a home as
they once did. Some homes may convert to
rental homes. In this regard there is
one very critical question that needs no answer: When was the last time YOU changed the
oil or even washed a car that you RENTED? It is highly doubtful that you ever did. Unfortunately, and I cast no dispersions on
people who rent homes, tenants typically are very lax in the exterior
maintenance of the homes they rent/lease.
If you are like me (and I hope not for your sake), have you ever looked
at the exterior of a home and wondered to yourself what the interior must look
like based how the outside looks? I know
I have!
If I had a magic wand, I would
begin teaching students in middle school or junior high school all things
relating to purchasing and owning a home and/or automobile. I seriously doubt that much has changed in
this regard from the time I attended grades 1-12. We were never taught anything about buying a
home, buying a car, renting a home, interviewing for a job, creating credit, the
importance of having goals, etc. If I
had that magic wand, I would change the training given youngsters – IMMEDIATELY! If you do not know what it takes to buy a
home or a car or take care of your own health, you will be living by RESPONDING
to emergencies instead of PREPARING for emergencies that strike us all.
Why should this Nugget be
distributed far and wide? Because
homeownership for most people will be the single largest investment of their
lives. They should want to protect that
investment and they most assuredly want it to increase in value. It will not increase in value on its own; it
takes knowledge, training, forethought and a plan. It takes goals. It takes the KNOWLEDGE of how to set
realistic goals and then how to work at achieving them!
It is not easy nor will it ever be
easy to address the poor conditions that you might expose when you begin
looking at your neighbors’ homes that need obvious maintenance. How do you address these issues. Other than direct confrontation, there is no
easy way. People have come to hate
Homeowners Associations because they can be brutal. They can also protect the value of YOUR
home, like them or not. If you live in
an area where there is no Homeowners Association, the ONLY way you may
have will be by confronting them and asking or even begging for their
help. Explain that every distraction
that a buyer sees in the neighborhood can cause a buyer to reject your home
when it is seen for the first time without even going inside. Explain to them that not only will they be
adding value to YOUR home, they will be adding value to THEIR
home as well. If they are tenants, your
only hope would be contact the actual owners and share your concerns.
If you are considering buying
property to lease/rent, my advice would be that in addition to the rental/lease
agreements, you give serious thought to preparing a document that the tenants
agree to. It should address what
maintenance tenants are expected to do and if they choose not to do
things like routinely cutting the grass, the rental amount will be increased to
cover the cost of having the yard maintained.
Make it their choice but if you agree to allow them or expect them to
perform, you must be willing to become the enforcer when they do not comply.
If you are like me, you can travel
your city or town and you can easily see properties, both residential and
commercial that will ADVERSELY AFFECT VALUE! It is my opinion that this is a correctable
condition. How? As stated above, it begins in the school and
in the home where children first learn “right and wrong.” It also depends a great deal on the local
government. Is your government a
proactive government or a reactive government.
In a proactive government, the elected members will create a plan to
educate homeowners (and commercial property owners) the necessity of properly
maintaining properties AT ALL TIMES, NOT ON JUST SPECIAL OCCASIONS. How do they accomplish this? They should have a means by which they
contact their constituents. If they do,
they could use this media to address the importance of properly maintaining
properties. The same elected officials
can also create town/city ordnances to cover properties that owners
neglect. I am fully aware that this is a
very sensitive topic for discussion but it is a discussion that really needs to
be addressed. I can look around my own
neighborhood at this very moment and see four or five homes where the grass is
routinely NOT cut. Trash is left
street side long before the scheduled trash collection days and then the cans
are left out long after the collection days.
Sewers in front of some homes are RARELY IF EVER cleared
by the people who live in the homes at these locations causing streets to
flood. Commercial trucks are parked
street side causing difficulties in traffic on that section of the street in a
neighborhood where there are lot of children and where school buses frequent
the area.
You would not believe the “things”
a probable home purchaser can find by just paying attention. Two examples stand out. First, I was in the Coast Guard for 20 years
and that means a lot of transfers and relocations. A good friend of mine and his wife, BEFORE
they looked at any homes to buy, would drive to the local high school in the
area they intended to look at. They
would park across the street before school would start and then sit and observe
the students as they came to school.
They told me that you can learn a lot about a community by the way
students dress and act on the way to and from school. He was right.
The second example is my own home.
I have a 4-bedroom home, meaning the next owner will probably have
children as we have. The home sits on a
3-way stop intersection. The street on
the side of my home is like a cut through that people take to avoid going a
different direction but there is this nasty 3-way stop at the
intersection. I once did a very
unprofessional study and counted the number of cars that just blew through the
stop signs without giving it a second thought.
If a family were to be viewing my home to consider purchasing it and
assuming they had children, the way up to as many as 60% of the drivers just
ignored the stop signs could be a deep concern for the parents and may
adversely affect the “quick sale” of our home.
Can you begin to appreciate that sometimes it is NOT the home
itself that keeps people from buying, it can be the little things 360
degrees around the home!
There ought to be a class that is
taught beginning in the second or third grade called Common Sense and
Civility 101. It has become so obvious
to me that Common Sense has become a lost art in 2025. Believe it or not, George Washington,
yes that George, President George Washington, put on paper his 101 Rules of
Civility. They are both fun and
educational to read. You can access them
by going to: http://www.foundationsmag.com/civility.html
If you do, you may see yourself in some of his rules (not a good thing)
that are now over 250 years old. If
George were alive today, I am sure he would be adding a lot more to the list,
especially on the use of electronic devices, driving cars, obeying traffic
laws, but more importantly, just learning and using Common Sense to become an ASSET
to YOUR community instead of a LIABILITY!