Creating Value: Your Value
By RYAN TAYLOR
Looking at real estate from the perspective of an investor, it’s easy to forget that behind each transaction is an intensely emotional decision – often one that is life changing for the buyer. Not only do people want to buy a home to grow their wealth but they also want a place to raise children, be close to friends and enjoy the nuances that make a home special to them.
And while we use many different tools (Google Earth, Realty Trac, Trulia etc.) to value a home, it’s nearly impossible to know what intangible aspects of a house adds value to you, the buyer. The concept of your own personal preferences when it comes to a residence is “Your Value”.
One of the main reasons real estate will always be an imperfect market is because of Your Value’s influence on the market. It is impossible for the rest of the world to know when a house that’s for sale is next door to YOUR best friend or within walking distance of YOUR job. In both these cases, because of the intangible benefit that creates an increase in Your Value, you may be willing to pay more than the typical buyer for that particular home. As well you should.
In a declining market, Your Value becomes more important because the decision to buy a home is so much riskier from a financial standpoint. Buying a house is a big decision at all points in time but it is never more profound than in a market where your new home is likely to be worth less than you paid in a short period of time.
Now, more than ever, you should be uncompromising as a buyer. The home you are looking for should be well defined –
TOO Broad: A 3 bedroom single family residence in San Mateo
TOO Narrow: 1234 Main St, San Mateo, CA
Perfect: A 3 bedroom home with a large backyard and updated kitchen between the 101 freeway and the 280 freeway.
Think about it this way – if you had $500,000 cash and you were going to spend it all on something, wouldn’t you require it to be perfect or close to it!? Well, that is exactly what you are doing when you buy a house — you just get a bit of help from the bank on the cash part.
The reality is that you should always be willing to pay up for the house that fits your parameters. As any good real estate agent will tell you, you should never purchase a home that you do not see yourself living in for at least 5 years (in this market, preferably 10 or more). With this thought in your mind, having a clear understanding of what constitutes Your Value is critical when looking to buy a home.
While we continue to believe it is a risky time to buy a house, we understand that there are certain properties that meet or exceed your every expectation. It’s very possible this home will not be available when market conditions have improved and risk has fallen. When the home is affordable for your situation and Your Value is reached, it might just be time to buy.
And while that doesn’t mean you should rush out and start bidding on properties that you convince yourself are “perfect,” it does mean finding the right property, at the right price, even in this market, is certainly possible.
But before you hit the Saturday open houses with your neighborhood Realtor, ask yourself this very important question: Do You Have a Friend in the Real Estate Business?
Tags: buyer, home prices, investment, preferences, property values, Your Value