The Four Fundamental Principles of the Real Estate Buying Process

No matter how much or how little you decide to learn about the details of your transaction, we've found four principles that apply to nearly any aspect of the process. In our years of experience, we have also identified some basic mistakes first-time home buyers are prone to make. Applying these proven principles will help you navigate through them.

The Four Fundamental Principles of the Real Estate Buying Process

1.      The rules of real estate are always local.

2.      The best deals are usually win-win.

3.      Price and value are not the same.

4.      Choose with your heart and your head.

Principle 1: The Rules of Real Estate Are Always Local

Markets change from year to year and from neighborhood to neighborhood. If you're shopping for a $150,000 home in San Antonio, Texas, you don't need any advice based on what the market was like when your parents bought, or what the market is like in Detroit, l'1ichigan, or in fact, in the $300,000 neighborhood across the river in Windsor, Ontario. As for your brother-in-law's hot advice for scoring a Bay Area bungalow? Let it go. Your cousin's rules of real estate? Plug your ears. Or at the very least, take them with a great big grain of salt. You only need to understand what is available for $150,000 in San Antonio right now-nothing more, nothing less.

Similarly, we also encourage skepticism toward the simplistic advice you may have heard. You know what we mean: Always offer below list price. Never look above your price range. Adages and absolutes like these can blind you to the realities of your unique market, a specific property, or your personal needs and can keep you from seizing the opportunities before you.

Also, real estate laws, procedures, and practices are local. They vary significantly from province to province, state to state, and city to city. The way a real estate transaction closing was handled for your brother-in-law in California or your sister in Quebec may not be the way it's handled where you're buying your home. One of the key things your real estate agent will do for you is educate you on how real estate transactions are handled in your area and guide you step by step through the process.

Principle 2: The Best Deals Are Usually Win-Win

Everything in real estate is negotiable, so don't be afraid to ask for what you really want. Still, negotiations end when the parties involved become inflexible. The solution? Find a win-win outcome that accomplishes what both parties really need. That's why it's important to prepare for any real estate negotiation by deciding where you will and won't be willing to compromise. In the end, there is always a certain amount of give and take. You hold on to those things you really want. and you offer up those things that the other person wants and aren't as important to you. In chapter 5, we will show you how to craft a competitive offer in which both the buyer's priorities and the seller's needs are met. Remember; where there's a will, there's a way-a way to a great deal for you.

Principle 3: Price and Value Are Not the Same

A common mistake occurs when people focus on price, not value. This applies to the home you buy as well as the professionals you use. Being cost conscious is always wise but being value conscious is even wiser. Price and value normally correlate: you usually get what you pay for. But when looking beyond the surface, always be clear about what you want and what matters, and then expect to pay a fair price for these. Just because it's cheap doesn't make it a bargain. Think of buying a home as a search for value.

We also want you to think of value as quality at a reasonable price. Just as you seek out value in the home that you buy, also look for value from the professionals you hire. After all, you're more than likely making one of the biggest purchases of your life. This is no time to cut corners. That half-price inspector may save you $200 today but could miss a structural problem that costs you thousands tomorrow. You should be able to count on your lender to lock in the best rate and deliver all necessary paperwork by closing. If a discount lender drops the ball, your closing could be delayed, it could cost you considerably more money, or it might possibly even cause you to lose the home.

So don't set yourself up for hassles, headaches, or dead deals. Look for value-that is, integrity, reliability, and impeccable service-from all the professionals you hire. This principle has always been true and will always be true: you get what you pay for.

Principle 4: Choose With Your Heart and Your Head

Whatever property you buy will be both your home and a major financial investment. You want to find a home you absolutely love. A home that seems to fit your life located in a neighborhood that just feels right. At the same time, you want the property to be a solid financial asset-one that is structurally sound and appears to be well positioned to appreciate in the future. In the end, finding that perfect place for you means balancing emotion and rationality. When you're out looking for your future home, go ahead; let your heart guide you. But when it's time to buy, step back and think with a cool head. In a few years, when you may want to sell the house, you will be very glad you did.