Selling-Buying In A Slow Market
We’ve been receiving quiet a few e-mails and phone calls recently on what else you can do as a seller to get your property sold, so for those of you out there still sitting on the market unsold here is some advice and some tips for selling and buying.
Why isn't my home selling
For the majority of people you have been doing the marketing and have been presenting the property well, and you are using a decent real estate agent. So why is your property still not sold? (If you are not sure whether your real estate agent is the right one send us an email and we will let you know!)
The root cause
The root cause of your problem may well be interest rates or just the constant talk about them be it going up or down… perhaps not a real revelation but let’s look at that in a little more detail.
Buyers that you are relying on feel the pain as well as the mere talk of interest rates has the exact same effect as if they were actually going up or down… if the rates are on the rise their borrowing capacity decreases and their dream of purchasing their first home fades little by little and many just simply give up hope! This has a direct affect on you the home seller as now there are fewer buyers that can actually afford to service a mortgage. As a result many properties are take substantially longer to sell and the average sale price starts dropping in many areas across Australia.
This drop in sale price frustrates sellers as they usually have some minimum figure in mind that they are willing to accept. Sometimes it is a figure plucked out of thin air or perhaps their neighbour sold 12 months earlier and that was a similar place so they expect to get the same or more.
The wood for the trees
Let’s not ignore the wood for the trees here, it is particularly important that you look at both aspects of your transaction the sale and the subsequent re purchase. You see most sellers, when sold, are re-purchasing almost straight away, and are usually doing that in generally the same location. Ask any seller who is on the market “what they want?” and you will almost always receive an answer in dollars amounts. In reality if they thought about it a little more “what they want” is to get sold and then buy a new home.
The most important focus
The most important focus here is not the sale price so much, it’s about the changeover dollar amount!
If the market is down a few percent more than your expectation… is that really a negative…. not if you are selling and trading up buying… this can actually work in your favour!
Do the maths
Let’s look at a typical scenario… someone selling to purchase a larger home expected to sell for $500,000 but the shift in the market gives a sale figure of $475,000. That’s 5% down on their expectation!
On the re-purchase side they expected to pay $750,000 for their next property but only paid $712,500 also five percent down on expectation! Overall in that transaction the move to the new home worked out to be $12,500 cheaper because the market had dropped.
So although your sale price may be down a few percent, a perceived negative, you should also realise that your outlay for your next property will also be a few percent lower!, a positive. And that means that you have saved $12,500 plus now have to pay less in Government Stamp Duties and when the market does pick up again the percentage increase on a property worth $750,000 will be greater than that on a property worth $500,000… so you’ve made more money!
Sell and Buy
If you are not getting offers talk to your agent to find out what you can do. Without an offer you have nothing to consider so get some offers coming in, it doesn’t mean you have to commit to one, but it starts the negotiation process and means you can go out confidently and establish the “changeover figure” on your purchase. If all the numbers add up you then proceed with the sale and purchase simultaneously.
If you are currently selling, or about to sell, and would like someone independent sitting on your shoulder observing the goings on, without interfering in the process, drop us a line and see how we can assist. We understand that you might have only dealt with agents once or twice in your lifetime but we do it every day! Contact iREC and see how we can help.