Selling your home is one of the most stressful times in anyone’s life. The uncertainty in outcome, the sheer amounts of money involved and the potential future use of the funds is enough to make anyone’s stomach fill with butterflies.
When an owner first thinks about selling their home, there is an underlying factor that was the catalyst for the train of thought. Perhaps upgrading the family home to fit a growing family; choosing to be closer to family or a desirable school catchment. It could be downsizing and even just selling for a great price. Shortly after thinking about selling the owner will think about whether is it a good time to sell.
This is an interesting question because the answer lies within. No one can tell you it is a good time to sell and be aware of anyone who tells you otherwise. No one understands your situation or the current circumstance that you find yourself in. Below are some considerations that you should consider when making that decision and help clarify the next steps.
What is the reason you want to sell?
If the reason is to take advantage of strong price growth and results then be careful. Especially if this is your primary place of residence. An impromptu decision to sell without any consideration as to where you will go may land you in a situation. Where if were to try and buy, you may be priced out of the market. If you were to buy without sufficient savings or a higher income to facilitate an upgrade in the home, it could be a risky move.
If the reason is non-financial and as part of your overall life plan, then there is no better time to sell. For the simple reason that no potential sale result should delay your life plans. As you do not know what will happen in the future and neither does anyone else. Generally, owners will wait on the sidelines for the opportune moment to sell but then hesitate or wait too late and the moment has passed. The reality of the situation is that the price you can get next year is better than what you can get this year and every year after that. What’s important is what you do next after you have sold.
What will you do next?
If this is a principal place of residence then, the answer should be almost definitely the purchase of another principal place of residence. To buy first and then sell later or to sell first and buy later are the posing options when selling your home.
To buy then sell mitigates against the possibility of being completely priced out of the market. However, it adds further pressure on you if you rely on a certain sale price of your current property to fund the next purchase. If that’s the case, then ensuring your ideal sale price is realistic, you had adequate savings to help fund the next purchase and an extended settlement should lead to a happy result.
To sell then buy, allows you to know exactly what budget you can work with. It is a race against time to get back into the market. As every week, month, and year that passes without a purchase means your budget is buying you less. If knowing your exact budget and you believe that your property has enough scarcity value and buyer pull to attract a lot of buyers to facilitate the perfect scenario for an outrageous result. Perhaps selling before buying may give you the additional dollars to maximise your budget. The importance of compromise and time in the market is key to utilising that additional budget when purchasing the next.
Selling an Investment Property
If you are selling an investment property then the rationale is purely financial and based on getting the best possible result. What you will do with the capital after the sale? You need to look at the fundamentals of the economy and the situation we are in. A low-interest rate, high employment, and a land-locked population with additional funds mean higher price growth of property prices. In addition to this growth, the reluctance of homeowners uncertain about the future and their incomes has withheld the housing supply.
After looking at the fundamentals, look at your asset. Is your investment property a quality asset? Is it well kept, maintained, and rarely vacant? If not, now is a good time to sell assets that may need attention or are vacant. Simply because there is no competition from other potential investment properties coming to market. Buyers will not compare your property with a better property that sold recently down the road if that property never came to market. Due to low stock, investors are sweeping up what they can get their hands on because $1 million in property, returns more than $1 million in the bank. The question then is, what will you do with the money after you have sold?