Price vs. Quality: Is There a Difference?
As a buyer, it is important to recognize the difference between getting a great price and buying quality properties at a discount. Price is only part of the equation. Look no further than some of the bank-owned foreclosures and short sales in the market to see the difference. Leaning toward the best price versus the best value is a trap into which many buyers fall.
Imagine you are buying an investment property to hold for at least five years. You are considering two properties that are essentially the same...same square footage, beds, baths, etc. One is priced $15,000 below the other. Which do you choose? Do not answer too fast or you may be choosing price over quality. Here are the reasons to choose quality over price:
- Condition? Good: Less out of pocket cost up front means more capital and higher profit early in the investment, which adds better overall performance. This allows for a quicker turn time because you don't have to recoup the extra cash.
- Quality Sells First: In a market flush with inventory, quality properties are the first part of the market to begin to appreciate.
- Higher Upside: Quality properties have a higher upside: in a market that is appreciating, the value of everything is rising. Home values rise when inventory is thin. Generally, buyers will pay a premium for quality properties so they do not have to spend more money on improvements.
Value is more than price: A savvy buyer is looking for total value and value is created by buying quality properties at a discount.