The Pring Perspective
Jan 2010 “Pearls of wisdom”
My dad used to say to me “It’s never wrong to take a profit Steve” and I’ve come to understand over the years that what he meant by that. If you sell something for a profit and the next chap sells it on and also makes a profit, don’t be greedy and wish you had made more but be grateful for the profit you have made.
If however, you have bought a property over the last few years and are trying to sell in the current market, the chances are that you won’t be making a profit at all. My dad would be saying to me now, “It’s never wrong to minimise a loss Steve and actually, you could be better off because of it”!
So how is that then? Well, if you are looking to trade up and move to a more expensive property, it isn’t what you sell your property for that’s important - it’s what you pay for the next one and the difference between the two that is the critical thing. It has become ingrained in us that “Bricks and mortar are a solid investment and you can’t lose out” and I still totally believe that in the long term. What’s more, you get to live in and enjoy your investment at the same time! However, these past few years have reminded us all that in the short term it is possible for bricks and mortar to lose value.
Therefore, if you are thinking of moving and the estate agents valuations are not what you were hoping to hear, think of it this way…
Let’s say for example, that you bought your property for £200,000 and you now want to buy a property that would have been £300,000 at that time. If prices have dropped say 10%, you will get £180,000 for yours but only have to pay £270,000 for the next one. So whilst you are technically making a loss of £20,000 on your house sale, you are paying £30,000 less for the next one and actually £10,000 better off!
Look at the bigger picture and try not to be completely focused on having to buck the market and get more than you paid for your property. If you do, you may well spend a long time on the market while others around you are selling. Accurate valuations and realistic expectations are the key. When putting an offer forward to a client for them to consider, I am sometimes met with the reply “I can’t possibly sell it for less than I paid for it”…but actually you can and still come out better off.
When marketing your property a good estate agent will contact the “hot” buyers first – in a busy market that might be several people, in a quiet market that might be just one! If just that one viewer makes an offer, please do take it seriously - I often hear… “But the house has just gone on the market” or “It’s just the first offer”…so here’s the thing; don’t automatically dismiss an early offer – in hindsight it may well be the highest one that you get! That’s because genuinely keen buyers will always make the first move while the less committed hang back - they are certainly not waiting for the price to go up.
So, my biggest pearl of wisdom is this; If you are going to sell your property please put all your emotions, time, effort and energy into presenting it to buyers in the best possible way (like all the best property programs tell you to and all the best estate agents will help you do!). Then take a step back and look at the FINANCIAL process with a dispassionate business eye and no longer think of your property as a home but as a financial transaction. Now that’s easier said than done, I know that, especially with the memories and emotions that are entwined throughout the years in the bricks and mortar, but it is certainly the approach that will reap the most reward.
Then you can get on with the lovely part…which is creating a new HOME in that next house.