The average person in this country spends close to (if not more than) two decades in school working hard so they can get a good career making a lot of money and eventually buy their dream home. We like to call that “The American Dream” —the truly ironic part is that the vast majority of that same group never received any education on how to buy or sell a home.
Regardless of your background, there’s a good chance a home is not only the largest purchase you’ll make in your lifetime, but it’s also your largest investment. When can I afford to retire? Where will my kids go to school? Will I be living in a high crime area? If I get offered my dream job in another state, would it be economically feasible for me to move quickly? So many questions about your life are determined by your home selection. Wouldn’t it make sense for us to invest more time in understanding as much as possible about this investment?
I was born into a middle class family, received my high school degree with honors, and eventually got my Bachelor’s Degree in Sport/Business Management from NC State University. Yet after 16 years of schooling, I wouldn’t have been able to provide even a simple explanation of the home buying/selling process. Now that I’m a REALTOR®, I work with people all the time who are in the exact same boat.
They don’t understand the intricacies of the housing market, can’t explain the details of different mortgage products, and are completely dependent on Zillow or tax records to determine a home’s worth. For many people, the only time they really invest themselves in trying to understand the housing market is when they’re ready to buy or sell. And that my friends, is how we ended up in the housing crisis of 2008.
Call me silly, but I think high schools and universities should begin to implement REQUIRED curriculums dedicated solely to learning about real estate. Even if you plan to rent for the rest of your life, the housing market will still have an impact on your life.
There are probably a great deal of REALTORS® who are terrified of this suggestion for fear it would eliminate the need for our profession. That couldn’t be further from the truth. There will always be a need for professionals who are interacting with the market on a daily basis. If I wanted to invest money in the stock market, I would be exhaustive in my research before making a move, but I would still enlist the services of a qualified stock broker because they have more direct experience with the market. It’s no different with a REALTOR®.
I was once in the midst of a transaction where a single mother with two kids was offered a better job in a different city a few hours away. The offer was completely unexpected, and she had literally just refinanced her mortgage several months prior.
The appraiser who was assigned to the refinance gave the home a valuation at about $10,000 over its actual value. I’m not sure whether the mother was in a financial bind or not, but for whatever reason, she took out a first and a second mortgage that equaled the max amount of the home’s appraised value. That one decision basically eliminated all of her equity and placed her “underwater” on her home.
After receiving the job offer, it only made sense to put her townhome up for sale. Only problem was that for her to pay off both mortgages, she had to list her home $8,000 above the highest sale that had ever happened in the neighborhood! Even in a hot market, buyers are not going to bother looking at a home that’s overpriced.
To make the move, she was essentially left with two options: (1) sell the home at its current market value and pay the difference out of pocket; or (2) put the home up for rent and become a landlord with little to no funds on hand for vacancies or repairs. She eventually decided to take the home off the market and stay put. It my broke my heart to see that she was forced into making a decision against the betterment of her household.
If determining home values and understanding mortgage products had been a part of her formal education, I strongly believe she would’ve never found herself in that unfortunate situation. Everyone should take this as a lesson to study the market, attend seminars, look at videos online, follow real estate blogs, etc. If you could dedicate one hour a week to understanding the real estate market, I GUARANTEE it would go a long way in setting you up for future success.
You don’t hire a REALTOR® to make decisions for you. You hire a REALTOR® to advise you in making the decision for yourself. The majority of REALTOR® are in this business for the long run, and we are with well intentions. A quality REALTOR® and mortgage consultant will try their hardest to keep you informed and make you aware of the risks involved.
But if you’ve never taken a second to study the market, there’s a good chance that everything we’re saying will fly through one ear and right out the other.
Education is the key. That may sound cliché, but it’s the absolute truth. Hiring a REALTOR® to assist with buying or selling a home doesn’t automatically mean you become knowledgeable about the process. At the end of a transaction, you should be able to explain (in detail) to a friend exactly why you made certain decisions during the deal.
Take a moment and think of one thing you can start doing today to become more informed about the real estate market. Let me know what you plan on doing in the comments section!
About Derrick Thornton.
Derrick Thornton is a full-time sales associate of the Fonville Morisey Realty Inside The Beltline office.
Prior to joining Fonville Morisey, Derrick spent over 8 years in the service industry, most recently as a Financial Services Rep at SECU. He holds a B.S. from NC State.
Originally from Richmond, VA, Derrick currently lives in Raleigh with his wife. He enjoys reading, date nights, basketball, cooking and writing.
Derrick is a member of the Raleigh Association of REALTORS®, the North Carolina Association of REALTORS®, and the National Association of REALTORS®.
Fonville Morisey Realty has 11 sales offices, with over 850 associates and employees throughout the Greater Triangle region. FM offers mortgage, insurance, property management, title services, real estate education courses and relocation services through its divisions and partners. For more information about Fonville Morisey Realty, visit www.fmrealty.com.