We all have an opinion and thoughts (!) on when is the best time to sell. And so do others. Real estate agents will tell us that anytime is a good time to sell but how can we be sure that they are not simply promoting their own cause?
So when is the best time to sell?
Sometimes we are offered very little choice in the matter. The circumstances are such that the property has to be sold in the very near future. Or the date of sale is part of carefully calculated investment plan. Other times we can afford to hold off and wait for what we believe is the perfect time. Timing is everything. Right?
So lets delve down deeper into these scenarios.
Circumstances that require an immediate sell. Perhaps it is a deceased estate with anxious family members requiring their cut urgently, or you have landed that dream job … that is 2000 kilometres away. You know that the market conditions aren’t perfect and that there’s more than a small chance that you will have to sell at a loss. On past sales data you may believe that selling your property now will result in selling the property at several hundred thousand less than what you perceive the property to be worth. So what do you do?
Conduct some research. Sure look at past sales data and think rather nostalgically about what could have been. Then place on your reality hat. Look at what properties in your area are currently selling for and work out an estimate. (A real estate agent can be helpful here.) Do the sums. If you decide to hold onto the property until the market improves then consider the costs involved. How much will your property need to increase by or earn to cover the rates, interest payments, alternative rental arrangements etc? You may find the outcome surprising. Then consider the future:- what do you know of the future? Are you sure that the property will increase in value? What if it doesn’t?
If you will be needing accommodation where you are moving to then do some research on the area that you intend to move to. Is that market mirroring what is happening in your area?
Sometimes when we sit down and remove emotion from a decision a logical answer is immediately apparent. The old adage of buying and selling on the same market is certainly applicable. Sure you may be taking a loss on the sale of your property but you may also have greater purchasing power when it comes to buy. And then there are the subjective factors to consider. By holding off on the sale of your property and renting in a new area are you merely forestalling a decision? And how does that impact on your family? Will it help your family to settle in their new area if they have a patch of their own?
Date of sale is part of carefully calculated investment plan. This is always a rather risky approach to real estate investment. Buying real estate on the premise of improving or renovating in order to make a capital gain is a decision that needs to be made on thorough research and preferably – some experience. You need to be aware of the potential selling price before you embark on such a decision and to have made realistic budgeting decisions that also include an amount of profit for all your hard work and the level of risk involved.
So what do you do if you have researched, planned, budgeted, worked your shirt off and now have a seriously upmarket and trendy property ripe for sell, only to discover the flattening news that sales in your area have fallen by a rather depressing 18%? The experts will tell you that when you share trade that you should always have a sell out position. I would extend this proposition to property investment. Always have a back up plan. Be prepared to buy and hold. Don’t over commit yourself. Or, if you have to sell then be realistic that you may have to take a loss and price the property at a market level. If you try and hold off or set too high a price you may find yourself stuck with a property that you don’t want to rent, can’t sell and week by week are selling your soul to the bank for. Better to take a loss in the immediate future than an even larger one in twelve months.
Wait for what we believe is the perfect time. Ah…. the perfect timing! So please someone explain to me … when is the perfect time? Is it when the market conditions are right, is it when the garden is fully established or the kids have left home? Timing is subjective and is relevant to people in different ways. What appears to you to be perfect timing may not be to your fellow neighbour. And timing the real estate market is the same. There is no perfect time. The perfect time to sell is the time that suits you and your family best. While we all strive to achieve the highest price and at times are guilty of placing our lives on hold in order to do so …. perhaps it is more practical to make real estate decisions not purely by financial reasons alone? They say that selling real estate is an emotional decision. If you are not a highly skilled and energetic property investor then perhaps it would be wise to base a decision on ‘when is the best time to sell’ on a number of factors. Consider financial – potential gains versus potential losses. Emotional – how does this decision impact on my family and me? And objective – given the information I have discerned from emotional and financial – what is the best decision for me?
Fisk & Nagle First Choice Real Estate always advises buyers and sellers of property to seek independent financial advise.