Asset or Liability; Which Are You?

 

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!