I read that in a book yesterday and loved it. A quote from Baltasar Gracián, medieval philosopher; 400 years later, still lands.

 

Here's what it means. Losing money sucks, sure. But it's a one-time problem. A bad product is forever.

 

Don’t be afraid of paying a little more, even by accident, for something good.

 

It’s a nice variation on Buffett’s famous quote:

 

 

This is particularly true in real estate. By default, if you buy a piece of real estate, you were the person willing to pay the most. You won a bidding war? You overpaid. You bought a home with no other offers? No one else wanted it at that price. 

 

But guess what? In 10 years, that $10, 20, 100k that you “overpaid” will be a rounding error.

 

I've never been scared of paying top dollar, or even overpaying, for an A+ property in an A+ area.

 

 

…is the best, most well-known real estate advice after “location, location, location."

 

We all know the standard reasons. They're always desirable. They appreciate faster.

 

But here’s another reason why: a more expensive house amplifies everything you put into it.

 

Take pools. Everyone knows they add value, and they cost roughly $150K to install almost anywhere.

 

Sure, a contractor might quote you more in Beverly Hills because you seem richer, but not much more.

 

The return, though? Entirely depends on the house.

At the super-high end, it gets absurd: buyers will add a pool and tennis court to a $14M home, then relist it at $25M.

 

Tell your kids: buy the best house you can afford because the house itself multiplies your returns.

 

 

Lori was talking to her former law partner the other day, who is in negotiation on a property he wants to buy. And this guy is a tough negotiator (arguably the best, Exhibit A: his progeny, my wife 🙄). But he and the seller are pretty far apart on price.

 

Lori told him exactly this: “Never let money get in the way of a great deal.”

 

He loves the property - a unicorn. We all know a gem when we see it. 

 

If the sellers won't budge on price, and they're willing to walk…f*ck it. Give them the money (within reason, of course). As they say, “you can be right, or you can be rich.” If found a gem, and you're holding long term, you're good.

 

 

Ten years ago, buyers had a general inspection, termite inspection, and sewer line inspection. Cost $1,500 and took one day. Now I'm seeing buyers drop $5-10 grand on a dozen separate inspectors whose recommendations get more creative (insane?) by the escrow.

 

We just had a buyer's agent bring in an AI mold inspector that delayed our escrow by a week (guess what? no mold).

 

Latest trend: the house isn't waterproofed and needs to be completely restuccoed (not cheap). Literally, never heard this before; and now I've heard about it three times in the past week.

 

My personal favorite is the chimney guys. I've been hearing about imminent chimney collapses for 25 years. Not saying these guys are lying, but I haven't seen one fall yet.

 

I've watched buyers cancel escrow over a chimney, and I’m driving by the same house 20 years later, and it’s quadrupled in value, and look, there’s the chimney, still standing, perfectly fine.

 

Anyone seen or heard of a chimney just falling over, please tell me.

 

Listen, mold is a real thing, and inspections reveal realities of the inevitabilities of home ownership, but here's the thing: it's sticks, bricks and drywall, and everything can be fixed. 

 

To bring it back to Balty's quote, the quality of real estate should not be judged by the age of the HVAC, but rather, the home's pedigree, location and lot. The former can be fixed; the latter cannot.

 

 

When real estate investors buy houses for themselves, they hardly do any inspections. We certainly don’t.

 

In fact, we're in escrow on a property right now (this is my 1031, more about this next week). We walked in, wrote an offer $500k under list same-day, no contingencies. Offer accepted! 

 

Our inspector is going on Friday. But, as they say, for informational purposes only. I need to know when to replace the AC, roof, electric panel, or water heater. Otherwise, the lights turn on, the water gets hot, and the property is foreseeably going to double in value over the next decade, so whatever it is, we'll deal with it.

 

I’m not saying don’t do inspections. They are useful for learning about your home, squeezing money out of sellers, and if there’s a major issue, cancel.

 

But remember that someone is living in the house now. 99% of inspection reports get filed away and never looked at again. 

 

Do your due diligence, but don’t let an inspector scare you out of your dream home…or your retirement.

P.S. Speaking of inspections, we just negotiated almost $400k in Seller concessions for a buyer client in Los Feliz! Reply to this email to work with an agent on our team.