The recent collapses of Silicon Valley Bank and First Republic Bank highlight the critical importance of managing assets wisely—especially for homeowners. These events are a stark reminder that just like businesses and investors, homeowners must take strategic steps to protect and grow their most valuable asset: their home.
As real estate professionals, it’s our responsibility to guide homeowners in managing their homes as assets. Here are eight practical tips to help homeowners ensure long-term sustainability and financial security:
- Stay on Top of Maintenance Regular maintenance is key to preserving the value of a home. Simple tasks like cleaning gutters, inspecting the roof, and servicing HVAC systems can prevent expensive repairs later. Consistent upkeep ensures the home continues to function as intended and maintains its value over time.
- Invest in Value-Boosting Upgrades Renovations not only improve enjoyment but can also increase a home’s value. Homeowners should keep good records of any upgrades, as these improvements can raise the property’s tax basis. This is especially useful for sellers looking to minimize their tax liability when they sell. The National Association of REALTORS®’ Remodeling Impact Report offers insights into which projects provide the best return on investment.
- Reevaluate Insurance Coverage Just like with deposit insurance, it’s crucial to ensure adequate homeowner’s insurance coverage. Homeowners should review their policies annually to make sure they’re covered for replacement costs. Additional risk-management measures, such as security systems or impact-resistant roofing, can reduce premiums and further protect the home.
- Prepare for Emergencies A solid contingency plan is essential. Homeowners should have emergency savings and a budget to manage unforeseen financial events that could affect their ability to make mortgage payments. Having a plan in place helps safeguard against fiscal crises.
- Maintain Open Communication with Lenders Homeowners should consistently make timely mortgage payments and consider refinancing if rates drop or their financial situation improves. Open communication with lenders is key, especially if financial circumstances change. It’s also important to understand mortgage terms and be cautious about taking on additional debt or borrowing against home equity.
- Seek Professional Advice Homeownership is a major financial responsibility. In addition to working with a REALTOR® for buying or selling, homeowners should consult with financial advisors, mortgage brokers, and other experts to ensure they’re making sound decisions about their assets.
- Monitor Home Value Regularly A home isn’t just a place to live—it’s an appreciating asset. Homeowners should regularly assess their home’s value, paying attention to local market trends, interest rates, and property taxes. Understanding the factors that influence home value allows for better financial planning.
- Keep Detailed Records Proper documentation is vital for good asset management. From the time of purchase, homeowners should maintain records of all transactions, renovations, and upgrades. Keeping detailed documentation ensures that homeowners can track expenses and increase their tax basis when they sell.
The failures of major banks serve as a cautionary tale about the need for strategic asset management. By taking a proactive approach to home maintenance, upgrades, and financial management, homeowners can ensure their property remains a source of long-term stability and security for their families.