- Take Your Time when Buying!
- Learn the Market
- Look at Properties at Different Times and Under Different Conditions
- Not All Improvements are Equal
- Make Sure You Know ALL the Costs
- If it Seems too Good to be True, It Probably Is
- Always Be Prepared to Walk Away!
The most successful buyers of real estate take their time in examining properties; they look at a broad variety of properties so that they truly know what the market has to offer, and, after they focus on a particular property, they research it in depth, and make sure to view it under all conditions. They ALWAYS listen to their “guts,” and negotiate skillfully.
Take Your Time when Buying!
This advice is based on long experience with people who got excited about one of the first properties they viewed, allowed themselves to get emotional, and ended up paying top dollar. Only later, after they were bound to the deal, did they find out that there were other, more attractive and possibly more realistically priced options in the market that they just didn’t know about when they made their buying decision.
One highly successful real estate investor we’ve worked with has a saying: “The only time you make money on real estate is when you buy it.” While this might seem like an overstatement, it cannot be argued that anything you pay for a property above what you should have paid is taken straight out of your ultimate profit years later when you sell. In other words, a hasty purchase is very difficult to overcome, even with massive investments of “sweat equity” and time held for appreciation.
Learn the Market
First of all, what exactly is the market you are looking at? Are you focused on a particular kind of property, with a particular view or on a specific kind of waterfront? Obviously, the more broadly you define your target market, the greater your range of choices, both in terms of quality, condition, size and price range. If you are looking at a very narrow market, such as Gulf-front condominiums with 3 bedrooms, for example, your choices will be fewer.
Whatever your target market is, make sure you’ve covered it. In this context, the use of a talented, experienced real estate agent is invaluable. The key knowledge that real estate professionals possess should be THE MARKET. It is their in-depth knowledge of the market that makes them most valuable.
Look at Properties at Different Times and Under Different Conditions
You may have looked at a house a dozen times, pored over every piece of molding and every appliance, and driven around the neighborhood again and again, but do you really know what your life would be like if you lived there?
I’ll bet most of your trips through that neighborhood to and from the house were during the day. What do you suppose happens on your new street at 10 o’clock at night on Friday and Saturday nights? How about midnight? 2 or 3 AM, when the bars are closing? Don’t you want to know? You’ll find out all about it after you move in, possibly to your chagrin. So, break your ordinary habits, and look at the neighborhood, street scene and homes at odd hours.
I’ll bet the weather was nice when you viewed the house, too. What about during storms? Heavy rains? HURRICANES???
Obviously, you’re not going to be out touring neighborhoods and properties during a hurricane evacuation, but any time there is heavy rain is an opportunity to find out what different areas of the market are like when the chips are down. We looked for many months before purchasing our home, and we saw with our own eyes that it was high and dry (including the parking areas) when many intersections in the area were flooded. Unless you have the presence of mind (and keen eye) to look at a street and tell where the water is going to go if there’s four inches of rain in three hours, you just won’t know about these things unless you’ve either seen it, or have talked to a number of neighbors about their experiences in inclement weather.
It helps, of course, if you stand in the middle of the street, and with your “eyeball” guage the height of the slab of your home over the crown of the road (usually the centerline of the pavement). If it’s not a foot or more (at least!), you might want to dig look much closer at flooding issues. You also want to find the nearest storm water drain in each direction, estimate their distance from the home, and the slope of the road between (if any).
We’re not saying examining the Flood Maps and other resources isn’t a good idea. It’s actually a great idea.. But there is no substitute for seeing and experiencing just as much of your property (under varying conditions) as you can before you buy.
Viewing law enforcement statistics on a neighborhood is also an excellent form of due diligence, and the same is true for traffic statistics. But you can also take the time (and make the effort) to talk to local police officers. They know what goes on in the neighborhood.
Not All Improvements are Equal
Especially if you are investing in real estate, you need to realize that while most properties you look at may need some remodelling for renting, re-selling, or your own use, not all improvements are equal. Some properties are basically sound from a structural standpoint, and just need a little cosmetic work. In other words, you just need to spend a little bit of “pretty money” to significantly improve the property’s curb appeal. Other properties need significant expenditure on structural items that won’t necessarily even “show,” i.e., “ugly money.” Read More About Remodelling
Make Sure You Know ALL the Costs
Florida is going through great change. While real estate taxes had been falling (and are MUCH lower than just a couple of years ago), insurance costs are wildly escalating. Be sure to take this into account in projecting your ownership costs.
Condominium maintenance has been rising steadily everywhere, and very rapidly in some older buildings, where major projects are coming up, such as concrete restoration and balcony issues. Many buildings were built in the 1980’s and early 90’s. If they haven’t already done these projects, you might see them early in your ownership there.
If It Seems Too Good To Be True, It Probably Is!
Your instincts are important tools. They take advantage of most (if not all) of what you know, both consciously and unconsciously, about things, people, and life. You need to listen to them.
Sellers do sometimes hide things from Buyers. Florida law requires sellers to disclose latent defects to buyers. Latent defects are problems that are not readily apparent to the typical buyer. There are several problems with this, however. First, not all sellers know they have this duty. Some are willing to skirt the rules, and, in all fairness, there is some interpretation in what is and what isn’t apparent to the typical buyer.
Always Be Prepared to Walk Away
Buying and selling real estate is all about negotiating, and your success in negotiating depends first and foremost on your bargaining position. If you “fall in love” with a piece of property, you won’t do as well negotiating as if you were always ready to walk away from it, because you’ve traded your bargaining position for instant gratification.
There are specific skills and perspectives which can make you a better negotiator. They will soon be discussed elsewhere on this web site, so come back!