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September 03, 2020

REAL ESTATE'S GREATEST DANGERS – HOW TO AVOID THEM THROUGH SMART DECISIONS - PART #17 – WAITING FOR THE MARKET TO IMPROVE

The real estate market is not a single entity.  It is millions of people making individual decisions based on their personal needs and opinions. Current real estate trends vary wildly from state to state, city to city and even suburb to suburb, making the real estate market virtually impossible to predict with any accuracy.

When deciding to sell, many use their personal opinion of the real estate market as the basis for that decision.  The chance to make a few thousand dollars more will often keep people in a property they should sell.  They wait in the hope their property will rise to a value that the financial gain makes the move worthwhile.

The mechanism to pick the top of a market is elusive.  How is it known the market has peaked?  Because, quite simply, it starts to fall.  By definition, the top of the market has been missed. A rising market can quickly become a falling market.

The danger comes in trying to predict the market.  Neither a rising nor a falling market is a bad thing: it is just the market. Based on individual needs, the right time to sell may be in either. 

The key question that needs to be asked before any sale is, 'How will my life improve as a result of this sale?' If there is no definite answer, the move should be reconsidered.

Price shouldn't be a seller's primary consideration if selling and buying in the same market.  Changeover cost is the key consideration. If the selling price does rise, most likely the purchase price will also rise.  Why not sell the house you don't want and buy the house you do want and wait for it to go up in value. 

When seeking to reduce debt, consideration must be given to decreased interest bills and the reduction in personal stress associated with the debt.  Does waiting for improved market conditions warrant the interest payments and stress involved in hanging on?

Sometimes a property must be sold to take advantage of other opportunities.  By holding out for improved market conditions, the cost of losing the opportunity may be greater than the increase in the value of the property.

Living in the desired house rather than remaining stationary, experiencing less stress thanks to reduced debt, and taking advantages of opportunities rather than missing out are three excellent reasons for selling now rather than waiting and thinking about how life might improve.

 

 

This article is an excerpt from “Real Estate’s Greatest Dangers – How to avoid them Through Smart Decisions” written by Andrew Trim – Managing Director of the Johnson Real Estate group - To receive a free please email mail@goulburnre.com.au and we can post a copy to you or visit our office at 148 Auburn Street.