I hear a lot about “market value” in our middle Tennessee region. Mostly, that phrase seems to be uttered routinely by real estate professionals trying to get their clients to buy a particular home.
“This home is below market value. The current owners paid more for it in 2011 than it’s selling for now.”
As a home inspector, and the owner of WIN Home Inspection Cookeville, I get a little itchy inside my noggin when I hear this. For me, a home is an investment and investments are not invested in based solely on current market value. At least, that isn’t the case if you are a wise investor looking after the value of your dollar.
A wise investor would do some research on that investment – what’s the long-term outlook for the product to be invested in? What goes into managing said product? Is there any chance of a sea change that would push the investment into the realm of relic? How did the product get to be at the current price point? Just what happened that the previous investor paid more then, but is seeking less now?
Home Inspector At Your Service
Some of these questions can be contextually aided via a home inspection – a thorough, unbiased, even-handed home inspection will assess current conditions of the home and help you, as the investor, to determine if the home meets the attributed “market value.” Unfortunately, after doing this, I often hear real estate professionals tell their clients that the provided information from me is “not important,” or, “isn’t really a bid deal,” or, “the market is strong,” or, “he has to find something, it’s his job,” which is a common excuse to cave, not ask for maintenance related items to be fixed, and give the seller the money asked without any conditions. After all, if you don’t, someone else will buy the home.
Ah, yes, scarcity. This home is the only home that can be the home you want to make your home. At least, that’s what you are told as a home buyer. Our market is very strong, the “inventory” is low, and demand is high. Now, this may be true, but it isn’t fully the reality. From my end of things as a home inspector, I see two things: All homes are pretty much similar in what they are. And, part of what drives a housing market to be “strong,” or have low inventory, is real estate professionals pushing homes. A strong market is driven, at least in part, by artificial demand (a basic theory within economic principal).
Pump The Breaks
Why does this matter, and how do I, as a home inspector, fit into this picture? Well, I’m the relative who comes into your home and opens the window shades and curtains, letting some cleansing light shine through. I’m not the light, that’s well beyond my capabilities. I am designed, as an industry, as a business, and as a professional, to help you the investor be more savvy with how you invest your dollars. I’m the closest thing to consumer protection at this leg of the race.
I am your home inspector, which makes me your greatest weapon for gaining knowledge. In turn, you take that knowledge and apply it to the other variables at hand in consideration of investing in the home for which you now find yourself interested. Which means, everything in your home inspection report is important and should be considered by you – and it should matter more, not less, if there is scarcity and demand. Sure, you may be competing with others for the same investment, but it also means the sellers are seeking your money. Your money holds value.
Action Over Reaction
Theoretically, this is where your real estate agent is supposed to step in and help you be a wise investor. Unfortunately, I see many that push you to “not rock the boat” and just invest. Not all agents are this way – what makes the good ones good is their willingness to put aside their own motivations (payday at closing) and actually put your interests and investments first. For me, “market value” is an ambiguous term that is bandied about and meant to make you reactionary. I offer you a chance to step back, breathe, and see the investment more holistically. That’s my market value as your home inspector.