Living In Fear Could Mean Not “Living” At All!

As local Home prices push ever higher, do you find yourself stuck in a rut and putting off your dreams? I’m constantly asked the question: “A crash is coming, right?”

My answer: Don’t hold your breath!

Leading up to the 2007/2008 crash, anyone who could fog a mirror was approved for a loan. Easy credit is just not a “thing” anymore – plus – the huge supply of inventory that was available then is nonexistent today – plus – we are under-building today – plus – current Homeowners are mostly equity-rich and rarely over-leveraged! I could go on!

Considering these – and more – fundamental differences between ‘then’ and ‘now’ the biggest thing you need to fear, frankly, is fear itself!  (Hmmm … that sounds familiar J)

Newsflash: For all the glittery talk of blockchain, cryptocurrency, NFT’s or whatever, the majority of 21st-century wealth still lives in the oldest asset class of all – Bricks & Mortar.

I recently revisited a McKinsey Global Institute study, logging the balance sheets of 10 countries representing 60% of global income (the U.S., the U.K., Australia, Canada, China, France, Germany, Japan, Mexico, and Sweden). I wanted to reconfirm some eye-popping numbers about just how much money is held in Real Estate, and why.

The study – “The Rise and Rise of the Global Balance Sheet” – looks at real assets, financial assets, as well as liabilities, held by households, governments, banks and corporations. Short Version: It found that fully two-thirds of net worth is stored in residential, corporate and government Real Estate! For all our modern investment opportunity distractions, it seems that ‘Bricks and Mortar’ are … well … the new ‘Bricks and Mortar’!

So … Back to FEAR!  Fear can be overwhelming when it comes to a Real Estate move. Fear that this is “the wrong time” to buy has kept too many would-be Homeowners on the sidelines and unnecessarily out of equity-building markets. ($$$ Up, Up, Up since 2012!!) Then there’s Fear of buying the “wrong Real Estate” – this one is multi-faceted: The wrong location to gain status or long-term value appreciation, the wrong price for financial security, or the wrong functionality or size for future family needs. These paralyzing Fears make you delay decisions and, in my experience, lead to Regrets – Regrets that haunt us long after we give in to the Fear that created them. If you’re afraid to act, expect Regrets about consequences of the delay, or the missed opportunity – Regrets about what you wanted to do and what you should have done … but didn’t!

Real Estate Buyers and Sellers are faced with big decisions involving often-unknown territory: Down Payments, Mortgages, Real Estate Law, Contracts – usually all piled on top of stressful personal life choices. Fear of making “The Wrong Decision” regarding any one or all of these issues is a common reaction. Real Estate professionals (That would be Me!) work hard to keep Clients’ Fear in perspective. My experience and advice can minimize or eliminate Regrets – Head-off Fear and Regret by asking me whatever questions pop into your head – and listen to my answers. I’m embroiled in these ‘Big Decisions’ all day every day, helping my Clients avoid what I see as ‘The Big Four Regrets’:

Regret #1: Decision Inertia or Waiting Too Long = Fear Fanned by Assumptions, Not Facts!

Would-be Buyers often watch a rising Real Estate market from the sidelines because they assume everything is priced out of their reach or because they hope prices will fall. Act to get the FACTS as soon as possible and avoid Regrets.

Regret #2: Choosing The Wrong Location = Fear Fanned by Lack of Confidence that Makes Buyers Followers, Not Self-Leaders. Eager Buyers who emphasize a list of must-haves based on what friends bought or on trends and fads, not a thoughtful analysis of their specific needs and how exactly a Home would enhance their lives, can end up disappointed with what they buy. Acting on assumptions – not true analysis – and  buying in an outlying less-expensive area can seem like a smart financial move. However, the impact of commuting for work and recreation must be measured beyond the simple expense of driving or transit. Include priceless elements like time away from Family, lost time with Friends, disconnection from the Community. Your Real Estate professional (Me!) should help you research local FACTS on location preferences and avoid future Regrets.

Regret #3: Buying a “Money Pit” = Fear of Missing Out, Instead of Learning as Much as Possible! Impatient Buyers who jump into a purchase, pressured by multiple offers, egged on by deceptively clever staging, or who skip a Home Inspection can run into unwelcome expensive surprises. A house can “look” great but be full of problems: Bad wiring, old plumbing, insufficient insulation, water leaks, structural issues, and other costly headaches. For example, these problems often materialize when “Gut It/Flip” renovations are conducted to create the much-touted open-concept main floor. Open-concept Homes, where Kitchen, Living Room, Dining Room, and perhaps Family Room are combined as one wall-less space, can end up being considerably more expensive than budgeted for. Rely on your Real Estate Professional to advise on how best to investigate property condition to get the FACTS and avoid renovation Regrets.

Regret #4: Playing Not to Lose = Fear of Perceived Risk, Instead of Playing to Win by Using Professional Expertise! Fear of making wrong decisions can make Buyers overly cautious and risk-averse. In Real Estate, this hesitant approach can lead Buyers to settle for less. If fear of risk is out of proportion to the actual risk involved, Buyers may be shortchanged, that is, they’ll make an ‘OK’ Real Estate purchase instead of a ‘great’ one. Real Estate professionals (Again – Me!) understand this important distinction for Buyers. Long-term financial gains coupled with future lifestyle benefits are not always easy for Buyers to visualize, especially when the property is not in the best condition or staged in a style that is not their own. Professionals see beyond the current presentation of the property to anticipate what it may become for specific Buyers: When Buyers are resistant to experienced input or fixated on preconceived ideas or fads, the outcome may not be as good or fulfilling as Buyers hoped.

Lean on your Real Estate Professional (ME!) to help you avoid Regrets in hindsight. 

“Call Paul!” 310.218.9256! Together we’ll explore your particular circumstances …

A conversation costs you nothing, but the results can be life-changing!

Cheers & Be Well – Let’s talk soon!

Paul                                                                         email:  Paul@PaulBullerProperties.com