The last meeting is the one that plays over and over in my head. Having met this elderly gentleman at my Open House, I thought he had invited me over to chat about putting his home on the market as well. Given that he's well past the point of middle age, I assumed it was probably time to think about downsizing . . .
"What are your goals with respect to your home?" I asked, pulling out my calendar thinking he'd be only too happy to leave behind the crooked (and treacherous) stairs to his front door and the deferred maintenance inside.
"This house is my children's legacy," he said. "I have no plans to sell, but I'd like to know what its current value is. In fact, my life expectancy is another 25 years!"
Oh, fair enough . . . and good for you.
Not that I haven't been asked to give my opinion before. In truth, I'm often asked for a professional assessment of value, specifically for impending divorces, inheritance requiring a stepped-up bases, probates, financial planning, loans, and the like. It's just that as we age, stairs aren't necessarily our friend and this house has a fair number of scary steps to the front door. I can't imagine aging into it.
Still, I was happy to help.
I'm going to preface my remarks by explaining that "value" is a moving target and it's also highly subjective. Moreover, homes have both an"intrinsic value" and a "market value." Professional appraisers look at the bedroom/bathroom count, the square footage of the home, location, functionality, lot size, the overall condition of the property and the nearby sales to determine a home's "value."
Realtors look at all of these things and more, (schools, community, amenities, etc.) and then try and factor in the "emotional appeal" of the home, in conjunction with the current market demand, to determine a property's "market value." They're not the same thing. Not by a long shot.
In both cases, "value" can go UP or down depending on the direction of the marketplace. Nearly every homeowner experienced a decrease in value after the 2008 financial meltdown, while our current marketplace has enjoyed huge appreciation over the last few years. This upward swell doesn't seem to be slowing down any time soon according to the the real estate experts who make their living on such predictions (and have many more degrees than me), primarily because demand far outpaces supply.
Finally, whether you ask a Realtor or a professional appraiser to help you determine your home's value (please don't ask a friend), "value" is still only one person's opinion. In other words, it's an educated guess. And while I can get pretty close with respect to where I believe your home will sell in today's world, that tells you very little about where it will sell 5 or 10 years down the road, let alone 25.
It's why when anxious Buyers ask me "What is this house going to sell for?," the correct answer is: "What are you willing to pay for it?"
Because once we calculate price per square foot and establish market context, at the end of the day, highly-coveted homes are likely to go to the Buyers who stepped up and purchased it with their hearts, and not with a quantifiable mathematical equation.
And no, I'm sorry, I can't place a "value" on how much someone else desires a property . . . but in a word, that's the essence of "market value."
One last thought; once you have the house of your dreams, make sure to update your will, OR put the house in trust (or both). Our homes often ARE the legacy we leave our children so the last thing you want is to cross over unexpectedly leaving this important asset in the hands of a probate court. Cliff and I did this a few years ago and I, for one, sleep better at night knowing our wishes are laid out appropriately. It was long overdue, and certainly is a crucial part of "keeping our house in order."