If you’ve ever been confused when it comes to contemplating selling, you’re not alone. Before you make the choice and book in removalists, here are the three critical questions to ask yourself first.
What is the state of the current market?
It’s the number one question on every potential vendor’s lips. The good news? The experts are starting to see signs of a correction taking place.
“Market conditions remain challenging, but this is something we are used to with the inner city apartment market. Buyer enquiry is low however signs are improving with quality buyer enquiry and an increased clearance rate,” Don Gallicchio, Managing Director of Galldon Real Estate, explains.
Director of Advantage Property Consulting, Frank Valentic, is also optimistic. “There’s a bit more certainty in our market here. For me, the overall market is very much where it was in Sept 2012,” he adds. “There are some good opportunities for buyers and the market is getting more confident.”
Is there ever a bad time to sell?
There’s often a sense of fear about selling in a tighter market, especially if you bought in a peak period. However, Don assures us it’s not all doom and gloom if you’re selling and buying in the same cycle.
“It does even out if you are buying and selling at the same time,” he confirms. “However, a good time to sell is when you need to. Even in tougher markets, days on market may be longer, but I believe, in most cases, if you have held the asset for a reasonable period of time (ie. 5-10years) you would still make a reasonable capital gain.
“For example, there was a home purchased in a strong market in 2010, (when clearance rates were 85 per cent) for $965,000 at a competitive auction that set a record price for the street at the time. On election day, an identical home with same land size and improvements sold for $1.46million in a flat Market,” Don adds. “Time and patience are of the essence when investing in real estate. And with historically low-interest rates and what I believe to be the bottom of the cycle, there has never been a better time to buy.”
While units are holding their own, according to Frank, his sentiments match Don’s in the housing sector. “If you bought at the start of the last cycle (seven years ago), you’ll be doing really well. Some of these owners are sitting on 50 per cent to 80 per cent growth.”
Am I better off keeping this as an investment property and not selling it to buy another home?
People who bought in the last two years of this current cycle might be tempted to hang on to the property as an investment, rather than sell it and incur a loss. However, there’s a lot to take into account before you make this major decision.
Frank advises there are pros and cons to be weighed up, which can be done by looking at the property’s investment grade criteria. This includes whether it’s in a great location (eg. close to amenities, public transport, cafes, shops etc), the aspect, orientation, floorplan, functionality and its size and space.
“Does it tick all the boxes of investment grade quality? If it does, definitely look at keeping it,” Frank suggests. “If it doesn’t, I’d try to cash in on that and buy something better. And use your money more wisely. Most of my clients would follow the advice to sell the place they are in, put their money into the new place and then buy a smaller investment property – re-organise the portfolio a bit.”
For Don, it comes down to your personal circumstances. “If you bought an asset that is underperforming, selling at a loss may be the smart option. You may be able to offset this against gains of better performing assets.”
Keen to discuss your selling prospects more in-depth? Call one of our property experts on 03 9670 3330 or contact Don direct on 0418 148 580 email: