A lesser known story: As it turns out, Charlie Munger - the investor legend who passed away this week - is the person who radically shifted Warren Buffet's investment doctrine away from buying failing companies at cheap prices to focusing on buying into quality companies at fair prices.....a good lesson for any investor.....and homebuyer.
Too often I hear buyers focused on locating that elusive 'bargain'. Highly competitive markets are usually rather efficient: many people are focused on buying good value, so the chances of locating something that is an obvious 'bargain' without competition driving up the price is slim to zero. This is usually best left to those who are obsessively focused on real estate investment, not those seeking a home.
For some a home is simply four walls, and they may benefit by buying the cheapest, best deal out there. Their expectations for long term upside need to be peppered with a reality check. Creating value at the time of purchase by having the vision to see what others may not be able to see is different. And yes, that can be a good strategy with the aid of a well-trained eye and professional guidance.
Value and 'fair price' is best assessed by those who really know their subject well.....what some might deem 'expensive' may not be so: a professional buyer's agent can demonstrate their worth multiple times over in this area.
I have learned that bargains are often bargains for specific, tangible reasons. Yes, they may turn out to be good investments over time too, mostly related to overall market forces, but if a home is for enjoyment over many years, it's unwise to discount this element of home buying. I have watched real estate around the globe and it is almost always the best quality properties and locations that deliver the best long-term results: both the enjoyment aspect via location and other factors as well as long-term capital appreciation.
Great investors don't simply invest in a stock price, they invest in the product, and the companies. Simply look at Charlie Munger and Warren Buffet's 'fair price' purchases over the years to see how they fared.
