Deciding on the right time to sell any property is a tough job!
And, understanding the property market is an even tougher one!
Worrying about the market can be dangerous. To start with, home owners can run into all kinds of problems when relying entirely on market conditions to determine when to sell. Often their decision is based purely on information that the seller has heard on the news. They then form their own opinions on how the market is travelling and make their decisions based largely on these perceived “facts”.
However, relying on the media in itself has multiple flaws. The data is often 3 or more months old and based on broad figures captured quarterly or sometimes even annually. The real estate market is fast and is constantly changing. The broad scope of these reports also translates poorly because the market should really be considered within a local context.
Take, for instance, the influence of school catchments on property prices; two houses of a relatively similar build on the same street can sell for substantially different prices solely because of a sought-after school’s catchment area. If the market can vary so dramatically within on street imagine how skewed the data from a broad media report could end up.
Waiting for the right market and price should also never be the main the reason you’ve stalled on the decision to sell.
The problem with this being the key focus is particularly evident when you’re looking to trade up. Consider a scenario where your current home is worth $500,000 and the new place you have your heart set on is $650,000. Observe here that the changeover cost would be $150,000.
Now, imagine the market has been playing the game and rising, so the smart choice would be to hold off selling until it is in its peak right? Wrong! Sure, after waiting two years you may sell your home for $550,000 a 10% increase in profit, but now check out that dream house. Its market value has also risen 10% and now you’re looking at a changeover cost of $165,000 a decision which has left you financially worse off and forced you to spend two more years in a home you wanted out of.
Debit reduction is another common reason people decide to sell their house and again people will often be tempted to troll the market biding their time. Especially if buying a new home isn’t in the cards, but don’t forget the other factors that should come into play when you’re under financial pressure.
- Selling now will see interest payments vanish or at least dramatically reduce.
- Personal stress will decrease.
- Selling now will open you up to new opportunities that can be capitalised upon.
This brings us to ‘opportunity cost’ which refers to a decision that leads to the loss of alternatives. For example, there are going to be times when a sale must go ahead regardless of the market conditions because you need to take advantage of other opportunities. In these situations, holding off in hope of improved market conditions can result in the loss of future possibilities, be those financial or personal.
The lesson here is that trying to predict the market when you’re deciding on the right time to sell isn’t the best idea. The right time to sell should be based on the individual needs of the seller; this could mean selling in a less than optimal market which can be scary, but not to worry, our wonderful sales team here at Clark Real Estate are ready to help you every step of the way!