Where is Wealth Housed?
I found an old drawing on my iPad when I was first playing around with my new apple pencil. It's simple but there is a lot you can draw from it (sorry I couldn't resist).
As we discuss in our certification course, the Realtor sells real estate (or help someone buy it) - they do not manage Real Estate for their client. They'll help you find a new house, or sell your old house, but they don't readily engage with you on how to best manage it for wealth creation... and for good reason. Once you buy a house the 'location, location, location' is often what determines the ultimate value. Pay cash and that's your only lever. If you borrow to buy a house, now you have a new lever. Enter the lender.
Lenders sell money. They sell money and earn a commission - the more they sell the more they make (that's how financial advisors told me they viewed my profession). It bothered me, but they were right and that catalyzed me to want to become more. If I didn't get paid to sell money I would probably have done something else. I wanted to be more for my clients, and based on what I knew at that time - the Realtor wasn't going to help the client, and neither was the financial advisor.
Financial advisors manage assets (or insurance or numbers) they don't manage the wealth in the house. They often don't even put the house on the overall financial plan. They view it as a necessity (you have to live somewhere), but most financial advisors don't have plans to manage real estate wealth, at any stage of its development. I'm finding a small percentage are starting to consider the possibilities of using real estate wealth in retirement, but they don't have the levers to help there either. They have enough on their plate managing the emotions of clients who see their wealth go up and down daily with the market.
Where is wealth housed? For most of us the house is the largest asset we own, and the largest liability we have. Borrowing is the lever that can dramatically impact how much you spend over your lifetime to live indoors, and how real estate wealth is used to accomplish your financial goals - the same goals the financial advisor is entrusted to maximize.
TIP: When I changed how I viewed myself, and the role I played for my client, I still lent money for a commission, but I was truly paid for the value of the advice I provided... and as the capacity for that advice grew I found myself working with Realtors and Financial Advisors toward a common goal of managing the wealth housed in the house.
