Homeownership is often presented as one of the only paths to wealth and security available to the average American. But are we really helping our clients make informed choices about this major life decision?
In this clip from the latest episode of Real Estate Uncensored, we talk to real estate experts and co-authors John Agostinelli and Chris Michaud. They share why homeownership costs are often underestimated and what agents should do to become a trusted adviser to their clients.
As Agostinelli explained, historically, homes have appreciated around 0.3 percent and 0.7 percent above inflation per year, not a great investment if you consider the operational and maintenance costs of the house. There are also transaction costs when you buy or sell and real estate taxes to consider.
What this means is that homeownership can actually leave you with your clients at a loss.
What’s the solution for your clients who want to own a home? Buy a house, but advise them to buy less than they can afford. Don’t max out, buy about 80 percent of what the bank says they should buy.
Ultimately, in the case of the crash — the consumer is who gets hurt the most.
People don’t look at homeownership as a business or an investment property but rather a consumer good, an expense and a way of buying into a lifestyle.
If you follow the media, the message sold to consumers is that homeownership is a path to wealth. There’s much more to this picture, and it’s critical that we’re informed, so we can inform our clients of the best path for them.
Let’s be candid with our buyers, not just about the price of buying a home, but the costs as well.
John Agostinelli has over 25 years experience in banking and real estate industries having worked at the FDIC examining the causes of bank failure and managing foreclosures in Massachusetts, New Hampshire and Rhode Island. He is also an experienced real estate investor and speculation home builder; and he rehabilitates properties, which helps communities to recover from the blight and regression caused by distressed properties. He is a guest speaker, author, real estate expert witness and real estate investment coach.
Chris Michaud is a 30-plus year veteran of the real estate business as a real estate investor, broker and industry insider with some lobbying experience at the state and national level. He’s a sought-after guest speaker and author. He was a past state Realtor president-elect, an investor coach and trainer of the RealInvest Profit System.
For information on Agostinelli’s and Michaud’s upcoming book go to http://easymoneyamerica.com/.
Matt Johnson is CEO of Pursuing Results, a podcast production and PR firm, as well as co-host of real estate podcasts such as Real Estate Uncensored and The Team Building Podcast.