Three Zones of Purchase Price
Mar 15, 2023
Some people pay more than fair value. Some people pay less. But there is a third price zone.
Consider this scenario:
- $11M = Premium price for a property, above fair value
- $10M = Fair Value for a property in the current market
- $9M = Stars have aligned and you can buy the property for this price right now if you act decisively.
- $8M = Price you may be able to get it for if you wait patiently for the vendor to become very desperate. However you may lose out to someone else if you do this.
If you buy for $9m you may be paying more than you have to.
But don’t confuse that with paying more than its worth, which you’d be doing if you paid $11m.