Before You Buy: What Are You Assuming About the Property?

Before you buy property, what are you assuming about that property? You can have completely accurate information about a property and still reach a conclusion the evidence does not support. The parcel really may be zoned residential. That does not automatically mean you can build the house you want. The property really may have 100 feet of waterfront. That doesn't automatically tell you everything about how that waterfront can be used. The information may be completely accurate, but the conclusion you draw may still go beyond what the information actually proves. So before buying property, I think there is a very useful question to ask. What do I actually know about this property and What am I assuming? Because those are not always the same thing. Facts don't interpret themselves. Let me give you a simple example. Imagine you're looking at vacant land. You confirm the zoning designation is residential. That's a fact. But then almost without noticing it, you may move from this property is zoned residential to I can build the house I want here. Those sound almost like the same statement, but they are not. Knowing the zoning designation tells you something important, but it may not tell you whether the soils will support the septic system you need. It may not tell you whether wetlands affect the building site. It may not tell you whether there's adequate legal and physical access. It doesn't tell you what the setbacks are and how that's going to influence your buildable envelope. It's not telling you where the utilities will come from or how much of the parcel is actually buildable. The zoning information can be completely accurate. The problem may be the conclusion we've built from it. What does the evidence actually prove? This is where property buyers get themselves into trouble. We naturally take information and assign meaning to it. We have to. That's how decisions get made. But sometimes we move from, what does the evidence show, to, here's what I think that means, without stopping long enough to ask whether the second statement is actually supported by the first. That's the gap I want you to pay attention to. Within Property Decision Intelligence, I call that gap Interpretation Gap It is the risk that the meaning we assign to property information goes beyond what the evidence actually supports. And notice what I'm not saying. I'm not saying the conclusion is necessarily wrong. It may eventually turn out to be completely correct. The problem is relying on that conclusion before the evidence actually supports it. The neighbor has a dock or stairs down From atop their bluff overlooking Lake Michigan. Waterfront property gives us a great example. Suppose you're looking at a Lake Michigan property and the neighbor has stairs leading down from their elevated bluff down to the shoreline. You see this with your own eyes. That's an observation. And then the thought naturally follows that you should be able to put in your own set of stairs down from the top the same bluff down to your private beach. Maybe. Just because the neighbor has a set of stairs leading down from atop their bluff, that does not establish the fact that you will automatically as a buyer be able to put in your, your own set of stairs leading down. So whether it's a set of stairs leading down from the bluff or a dock, just because the neighbor has it does not necessarily mean that you'll be able to because There may be differences in shoreline conditions, bottomlands, permitting, especially important with putting in a set of stairs down, water depth, exposure, property rights, or the history of the neighboring dock itself. The neighbor's dock is useful information, or the neighbor's set of stairs is useful information, but it is not proof of what your property can support. For example, as it relates to a dock, there's all along Cathead Bay Almost no one has a dock along Cathead Bay, but there's one little area where I sold a lot right next to a home that also, by the way, recently sold, where they had a dock in when I shot the video. But just because the neighbor has the dock does not mean that we can assume that the property I sold right next door will be able to support that. That was an outlier. Almost no one along Cathead Bay Was putting in docks, and that's probably for good reason. This neighbor was able to do it. So because of the conditions and how the winds go in their particular little spot, they were able to make it happen. But you cannot assume just because one piece of property is able to put in a dock that you'll automatically be able to put in a dock nearby. So the neighbor's dock or set of stairs leading down from the bluff is useful information. No doubt about it, but it is not proof of what the property you are looking to buy can actually support. And that's a distinction I think buyers should learn to make almost automatically. What is a fact and what conclusion am I adding to that fact? In fact, that's where the saying jumping to a conclusion likely comes from. And that's what we need to caution ourselves against. is jumping to the conclusion that because the neighbor has a dock, I'll be able to have a dock, or because the neighbor has a set of stairs leading down from his bluff, I'll be able to do the same. We need to stop and make sure that we confirm those facts before jumping to a conclusion. Another example, the listing says it's buildable. The same thing happens when a listing describes something as a buildable lot. There may be very good evidence behind that description, or there may still be important questions to answer. The word buildable itself does not finish the analysis. The better question is, what evidence supports that buildability conclusion for the project I actually intend to build? Again, the point is not to assume the listing is wrong. The point is to understand what available information actually establishes the this lot as a buildable lot. Permission is not the whole answer. The same reasoning applies to short-term rentals. Suppose you confirm that short-term rentals are allowed in that area and a prospective home that you're looking to buy, short-term rentals would be allowed. That's useful information, but it still leaves a property-specific question. Can this property under your ownership receive or retain the approvals it needs? And even once that is established, legal permission alone does not establish a workable rental operation. Parking may matter. Septic capacity may matter. Occupancy limits may matter. The layout matters. Seasonality matters. Management and operating costs. Matter. And probably more important than anything is future regulatory changes may matter. We've seen that across Leelanau County, especially that townships, villages, etc., are coming in later in the game with regulations related to short-term rentals. And that has a major impact on the future viability of your investment. in a short-term rental. So short-term rentals are allowed in this area and this particular property can be legally operated the way I intend are 2 totally different conclusions. And even after the legal question is answered, this property can legally operate as a short-term rental and this property actually supports the ownership and operating plan I have in mind. are 2 totally different conclusions. Each step requires interpretation. And by the way, assumptions can work in both directions. And I want to be careful here because assumptions are not always optimistic. Buyers can over-interpret information negatively too. An inspection identifies an older roof. That does not automatically mean the roof is about to fail. Or part of a vacant parcel looks wet. That does not automatically mean the entire property is regulated wetland and unusable. A property has shared waterfront. That does not automatically mean that it's inferior to direct private frontage for every buyer and every intended use. The discipline works both ways. We're not trying to make property look better. And we're not trying to make it look worse. We're trying to make sure the conclusion is supported by the evidence. Inspections are especially easy to over-interpret. Home inspections are another place where I see this. An inspector identifies moisture staining near a foundation wall. That's useful information, and it may absolutely deserve further investigation. But But what did that inspection actually establish? Did it establish the exact source of the moisture? Did it establish the repair cost or whether there's structural damage? How urgent is the problem? Whether it will happen again? Maybe the report answers some of those questions, maybe it doesn't. The really important point is not to assign more certainty to that inspection finding than the inspection actually provides. Sometimes the responsible next step isn't to immediately decide what the observation means. Sometimes the responsible next step is simply get better evidence. The most important middle step. This connects to something I've talked about in other videos. I think about property decisions as moving through 3 stages. Observation, interpretation, judgment. Observation is, what do I actually know? Interpretation is, what does that information reasonably establish? And just as importantly, what does it not establish? Then comes judgment. What does all of this mean for the decision I'm actually trying to make? That middle step, interpretation, is easy to rush through or to leap over. People have a tendency to collect observations and then leap over interpreting those observations to drawing conclusions. And that, again, the saying jumping to a conclusion, really, really applicable here. So let's come back to the importance of spending more time in interpretation, that That middle phase of a decision-making process. And so if the interpretation is weak, the final judgment can be built on something the evidence never actually proved. Try this before you rely on a property conclusion. So before relying on an important conclusion about a property, I would slow down and ask a few questions. What do I know? Where did that information come from? What exactly does that source establish? What am I adding to it? What would have to be true for my interpretation to be correct? And if I'm wrong, does it materially affect the decision? That last question matters because not every property question requires the same level of investigation. For example, if the issue is minor, inexpensive, and easily reversible, You may decide the remaining uncertainty is absolutely acceptable. But if you're removing an inspection contingency, buying a waterfront property because you believe it's dockable or that you can put in your own set of stairs, or you're buying land because you believe it's buildable, or purchasing a property because you intend to operate it in a particular way, like using it as a short-term rental, then the conclusion may deserve much stronger support. The amount of verification should fit the importance of the decision. In other words, it should be proportional. Better judgment does not require perfect certainty. I also don't want this to turn into never make an assumption. That's impossible. Property decisions require interpretation, and you're almost never going to eliminate every uncertainty. The goal isn't to prove everything beyond any possible doubt. The goal is to understand which conclusions matter, what evidence supports them, where uncertainty still exists, and whether you understand enough to make this particular decision responsibly despite the uncertainty that remains. Sometimes that means talking to the township. Sometimes an attorney, a surveyor, an engineer, the health department, an inspector, an environmental specialist, a wetland assessor, or another professional who is actually authoritative for the question you're trying to answer. My role as a real estate broker is often to help identify why the issue matters and what question needs to be answered. That doesn't make me the controlling authority on every technical or legal issue, and that's an important distinction too. Final thought: before you buy a property, don't just ask, what do I know? Instead, ask, what am I assuming that information means? Because the fact itself may be completely accurate, The risk may be in the conclusion you've built from that fact. Acreage doesn't automatically establish usable area. Waterfront doesn't automatically establish waterfront usability. An access easement doesn't automatically establish convenient access. Rental permission doesn't automatically establish a workable rental operation. Residential zoning doesn't automatically establish buildability. Information matters, no doubt about it, but information is not judgment. Between the two is interpretation where most people don't spend enough time. So before you rely on an important property conclusion, ask one disciplined question: Does the evidence actually support the meaning I'm relying on? If you're not sure, that does not automatically mean the property is wrong. It may simply mean the next step is better interpretation, better verification, or a more honest understanding of what remains uncertain.