When and why you should sell
There are a number of things you might want to consider when deciding whether or not to sell your investment property.
Before you make the decision on when to sell, taking a good look at your finances and the current housing market forecast can help you decide whether now’s the time to sell or if you can or should hold off until later.
If you find you’re under pressure to complete the sale because you need to free up money then the speed of closing the deal might be your most important consideration.
It is still worthwhile however to go through the process of understanding your true financial picture to help inform your decisions when you’re in the midst of the selling process.
What does your current financial situation look like?
Evaluating your current financial position and getting a true picture of where you stand financially could make a big difference to the outcome of your sale.
The benefit of taking the time to understand your numbers is you’ll have your key financial information at your fingertips such as:
- how much you need to achieve from the sale
- how much time you have to complete the sale
- when you need to receive the proceeds from the sale
After this exercise, you may find you have the opportunity to plan the timing and prepare your investment property for sale without financial pressure driving all your decisions.
What’s the housing market forecast for your suburb?
Taking a look at average home prices by city or state can give you a rough idea of what to expect for your own property.
You may also want to get an understanding of how quickly sales are completed, and what prices properties are selling for in the suburb where your investment property is located. Checking the latest auction and home sales results, or getting a property appraisal with local real estate agents can also give you an indication.
Your local council could give you information on whether any major infrastructure developments are being planned or will be completed in the near future. Schools, shopping centres, new roads or rail links can contribute to higher property values.
So depending on how much time you have available to you, you can decide whether you should sell now or hold off until these improvements are in place.
At the very least, if you must sell sooner rather than later, this information can be added to your real estate listing to paint the picture of what life could be like for your buyer.
Understanding rising and cooling markets
What is a cooling market?
A cooling market could also be considered a buyer’s market.
If you’re selling in a cooling market, you might need to be more open to negotiating with your buyer to get the sale over the line. And be prepared that you might even sell lower than the list price. If you’ve done your numbers, you’ll be really clear about how low you can go.
Some indications that you’re in a cooling market could include:
- Fewer people buying so the number of closed sales dropping each week
- The percentage of property sold by auction lower compared to the same period the previous year
- Declining median sale prices
- Interest rates increasing
When it costs more to borrow money or when it's more difficult to get credit there can be fewer people able to purchase, so demand for property can drop. Keep an eye on rising interest rates as this can contribute to a cooling market.
What is a rising market?
A rising market could also be considered a seller’s market.
If you are selling, you may be able to score a higher price for your property at auction.
Some indicators of a rising market could be:
- lower availability of property for sale compared to the previous month
- more buyers competing for less property
- lower interest rates
- It’s a good idea to keep a close eye on trends in the market, from interest rates to supply and demand to know if you are buying and/or selling at the right time.
How to survive selling your investment property in a market downturn
If you’re looking to sell your investment property, changes in the property market could impact the success of your sale particularly if you end up needing to sell in a cooling market.
All is not lost however if you find yourself in this scenario.
Here are some tips for selling in a cooling market:
Select the right agent
Do research to find an agent that has experience selling property in a market downturn. Drill down into what marketing strategies they have to get buyers interested in a cool market. Do they have a strong list of active buyers they can reach out to directly? You might want to look for an agent that understands you can’t just do what they’ve always done and need to be a bit more creative when marketing the property to attract buyers to it.
Know your numbers
We’ve mentioned earlier the importance of understanding the market and knowing your numbers. In a slow market buyers may negotiate more aggressively, so be prepared to set a realistic price. If you’ve got a good agent that’s upfront with you on what to expect, the price you achieve should not be a surprise.
Prepare your property
Be prepared to consider putting in a bit of extra effort and money to spruce up your property so potential buyers see it at its best. You want to make a great first impression so as to encourage potential. A quick exterior paint job and a front garden tidy up can go a long way in presenting a good first impression.
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- Chapter One : Things to consider before investing in property
- Chapter Two : Determining where to invest
- Chapter Three : Investment properties by dwelling types
- Chapter Four : Finance for your investment property purchase
- Chapter Five : How to invest in property
- Chapter Six : Adding value to your investment property
- Chapter Seven : Positive and negative gearing
- Chapter Eight : Getting your loan
- Chapter Nine : Selling your investment property