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William T. Dillard coined the famous phrase “Location, location, location” in the early twentieth centure. Most people don’t realize that Dillard, the founder of Dillards department stores, one of the most successful chains in the country, was actually talking about retail business not real estate. Now, however, every real estate agent out there has coopted the phrase as their own and uses it incessantly. They don’t actually mean that there are three specific things about location that are important, but rather that location is such an important factor that it far outweighs everything else.
For our purposes, though, we will break location into three categories. First we will look at these theree things about location to see what most real estate agents, and indeed most people, believe makes a piece of property a good buy. You will find that all advice from most real estate agents about location, or any other aspect of the property, is aimed at keeping the price high and going up.
In the follow-on post we will examine these same aspects of location from the perspective of being self-sufficient. The criteria will be very different from those aimed at just keeping the price high.
Location. Real estate agents will try to guide most of their customers toward properties in the city or suburbs. They will emphasize repeatedly how convenient things are from the property. They will show you how close it is to the grocery stores, the mall, other shopping, and maybe some churches and the fire station. They will probably point out how to easily access major roads to get you where you want to go. The real estate professional’s ideal property for you will be close to everything.
Closely in keeping with this theme of convenience, they will try very hard to steer you away from the fixer-upper house, which would save you a great deal of money. They want you to buy a house with no cosmetic blemishes. It will be “turn-key”, ready to move into immediately and need nothing but your furniture to make it complete. The reason is that this type house will sell for full market value and maximize the realtor’s commission. Always remember that the realtor does not work for you as the buyer and his objective is to make as much profit as possible on this transaction.
If you even mention buying an undeveloped lot and owner-building a house, most realtors will look at you like you are crazy. As soon as they regain their composure, they will begin telling you every reason imaginable why it can’t be done. In the next installment, we’ll look at how it can (and should) be done.
Location. The real estate agent’s ideal location will have rigid zoning laws. Zoning is very important in their view to prevent buiness or anything else that is undesirable from encroaching upon the neighborhood. This protects the property values. In addition to zoning rules, the house will be located in a neighborhood with lots of deed restrictions (or covenants) that will thoroughly define what you cannot do on your own property. Just as zoning protects the neighborhood from encroachment from the outside, these restrictions are to protect the other homeowners from encroachment from within. Many of the things you will want to do to make yourself more self-sufficient will be viewed with disdain from the typical homeowner so they need to make sure you can’t do it near them. Again, you will be told, this loss of freedom is for your own good because it protects your property value.
Location. This realtor’s ideal property will be in a subdivision with a lot of other houses very similar to it. In addition to the rules on what you can’t do, there will also be plenty of rules that determine what the house has to look like. Your house will be like every other house. Uniformity rules the day here, because anything different is bad and can lower property values. If your house is much larger or smaller or a very different style from the houses around it, it will bring down not only the property value of that house but also the houses around it. This must be avoided at all cost and it will severely limit your freedom.
All the houses recommended by the real estate professionals will have two things in common – high cost and lots of restrictions. This is actually good for the normal American who wants to keep up with the Joneses and is ready to spend a life time of mortgage payments and other big expenses to do it. All these things they recommend really will keep the property values up (until a housing bubble pops like it did in 2008). For those of us who want to be responsible for ourselves and live a more self-sufficient life, though, this advice is the opposite of what we want. We will look at these same aspects of location from the perspective of the self-sufficient buyer in the next post.
Now it’s your turn to talk. Leave a comment and tell me about your experience with realtors. Have you already bought the “American dream” house? Are you ready to leave it for something better suited to being self-sufficient?