The Appraisal of an Asset

I recently had my home appraised in order to refinance it.  Shalauna and I spent hours getting the house ready for show.  We mopped the floors, vacuumed the carpets, cleaned the bathrooms, organized the closets… we really polished things up.  My house is generally neat and clean, but for the appraisal we wanted it to be extra nice.

When the appraiser came, she toured the house and took note of how clean it was.  She commented on the nice subtleties of the home.  She pointed out the red accent wall in the living room, the premium hardwood shutters in the windows, and the protective epoxy flooring in the garage.  Overall the appraisal went very well and we are hoping for the highest value possible.

During the appraisal process I began to question where my home got it’s value.  Where does the value come from?  When I bought my home I got to choose some of it’s features.  I chose the carpet, tile and paint colors.  My selections were implemented by the builder and his contractors.  The Architect contributed by engineering the structure and design of the home, the construction workers contributed labor and know how, the builder contributed his wisdom and ability to manage people.  The materials used to construct my home have value, but it wasn’t until the builder and his contractors combined their efforts to build a home with those materials that they became worth anything significant.  As we can see, ultimately the value of my home (and everybody else’s) came from people.

YOU ARE THE ASSET

After I bought my home I became the steward over it and at that point the value of my home became dependent upon me.  If I neglect the home and fail to keep it properly maintained, it’s value will drop.  If I actively work to keep the house clean (and bat free) and constantly try to improve it, the value will maintain or increase with good market conditions.  During the home appraisal the appraiser informed us that it was refreshing to walk through my home since it was nice, clean and well maintained.  She said that there are many homes that are messy and gross that she has to walk through.  The cleanliness of a home may not affect the value of a home in the short term, but in the long run it certainly does.

Shalauna and I Painted the Garage with our good friend Mike, it’s amazing how much nicer a garage feels with some white paint on the walls!

Banks understand that the person behind a home makes a big difference.  A bank is interested in protecting itself and ensuring that it does not make a bad investment. That’s why they make you jump through so many hoops when you apply for a loan to buy a home. They require proof of a reliable income, they want to see how much money you have on hand, they look at your credit history and current credit score, they want to know about any debts you may have and that’s only the beginning!  Then they have you sign a contact that is 5 bazillion pages long.  They do all these things to ensure that you are a worthwhile asset.  They are seeking a person who can become a good steward over a home.  This is the person they can trust to lend money to.

PEOPLE ARE THE VALUE BEHIND EVERYTHING

People don’t just give value to homes, they give value to everything.  Every valuable object we own got it’s value from a person.  When I buy an iPod I might pay $400.  That $400 gets me an iPod device to keep.  But ultimately there are people behind the iPod that gave it that $400 value.  It is the value of those people and their talents and skills that made me want to exchange $400 for the device.  Sometimes we get carried away thinking ‘things’ have value.  We want more and more ‘things’.  But ultimately, it is people who have value.  Any ‘thing’ got it’s value from a person.  Devices don’t have bank accounts with dollars in them; people do.  Objects don’t own homes; people do.  Those people are the assets.

YOUR JOB ISN’T AN ASSET, YOU ARE

Your employer sees you as an asset (even if you don’t).  When you interviewed with them, they evaluated what value you could bring to them.  When they offered you a job they agreed to exchange a certain amount of money for your time.  When you took a job with them they acquired you as an asset and in exchange volunteered to give you X dollars every two weeks for 80 hours of your time.

I have some friends that are scared to death during this economic downturn that they could lose their job.  No doubt, during difficult times, we should be grateful for an income.  My question is this: What is there to fear if you are a good asset?  I work as a Software Engineer for an outstanding company.  If (heaven forbid) I lost my job for some reason, it certainly would sting.  It would be a challenge to determine what to do next.  But ultimately I’d know that I am a valuable asset with the ability to use my talents to create things of value.  I am certain that in the event of a job loss, I’d be able to either find a new job of equal or greater salary or work independently or as a business owner to create value for others.  That way I’d be able to continue to live prosperously and generate an income.

SHARPEN THE SAW

The 7th habit in Stephen R. Covey’s book The 7 Habits of Highly Effective People is “Sharpen the Saw”.  He relates it to an analogy of a woodcutter who saws for several days straight.  The woodcutter is less and less productive since the saw becomes more and more dull.  Without sharpening the saw, the woodcutter will not be able to continue to be a valuable asset and cut wood effectively.  We can apply this idea to our lives.  If we sharpen our mental, physical, emotional, and spiritual saws then we can become better assets in life.  When we have a sharp saw, we can feel confident that our homes will maintain or increase in value.  When we have a sharp saw, we don’t need to fear a layoff because we can continue to ‘cut wood’ under any circumstance.

I’m glad my home appraisal experience led me to reflect and remember that people are the real assets.  At the end of the day, we should each take an appraisal of the most important asset: ourselves.  What is our personal worth and what kind of value do we bring to others?  Regardless the answer to that question, we can always sharpen our saw and improve ourselves every day.