In his response to an article highlighting the Five Laws of Stratospheric Success written by the venerable author and Real Estate speaker, Dr. Bernice Ross, a successful Realtor® by the name of Dave Robison suggested the following:
Those are great laws and are so true. On the flip side, you can see how people tried to make money without obeying the laws. Many people tried “flipping homes” without adding any value to the home. This is speculative and is considered quick easy money. Thus our market is being punished by trying to make money without adhering to these laws. You make money two ways in real estate: either by time, or by adding value. Those who know this make money in any market. Sounds like a great book.
Dave makes a great point. Still, I’m not sure I agree 100 percent. (Then again, I’m certainly not a real estate expert, and Dave is!)
Here’s my question: Don’t real estate flippers provide value? After all, they keep some people from losing their home to foreclosure. And, they help others to own a home. I’m not sure time is an indication of value in the “flip,” any more than a Realtor® who lists a home and sells it in just one day adds any less value than one who sells it in 63 days.
As far as flippers only being “speculators” . . . I think that adds value in and of itself, as well. After all, without speculators being willing to take a risk (speculators often get a bad rap, but remember, by their very nature, they also risk losing money), the market would not have nearly the movement it has, and prices would be much less predictable.
My point is not to disagree with Dave. He seems like a great guy (and he might be correct). On the contrary, I appreciate his opinion. The point of this post is to pose this question:
How do you personally define and/or consider value as being created in a marketplace? We value your thoughts.