When to Sell a House
While we are in recession the media reports on property prices are always confusing. Some days prices will be reported as going up, the next down! With inconsistent reports, it’s tough to know when is the right time to sell a house is. Kate Faulkner, MD of independent property advice site Designs on Property explains how you can work out when is a good time for YOU to sell your home.
To begin with, according to Kate, it depends on whether you are trading up to a bigger home or trading down from a larger home.
“Contrary to general media articles on property selling, selling your property when prices are falling if you are trading up to a more expensive home can be a good idea” says Kate. “If you sell your current home for £150,000 and have to drop the price by 10%, you ‘lose’ £15,000, but if you can secure 10% off your new home which equates to £30,000 for a £300,000 property, you are quids in by £15,000″.
There are issues with this of course, you might have to drop your property price by 10% but only get a 5% discount off the higher priced property, or if you buy the property at £30,000 discount and prices fall further, in the short term your property value might drop further, negating any discount you’ve secured. Kate says not to worry too much about this. “If you are buying a home for £300,000 and staying in it for five or more years, then you are more likely to get a good price for it while prices are falling, and as the economy starts improving, we are likely to go back to a market of more buyers than sellers, so prices over time will recover” she reassures. The only caveat Kate suggests is that if you have to sell within a year or two due to unexpected circumstances, then this might leave you in financial trouble.
If on the other hand you are trading down from a large to a smaller home, then you ideally want to sell when the market is rising. Selling your home when prices are going up means the £300,000 home you are selling goes up by 10% ie £30,000 while buying a £150,000 home, means you pay just £15,000 more, gaining £15,000 in the process.
Kate says though, “Unfortunately people are often trading down for difficult personal reasons. If you have retired it might be due to the loss of a loved one or you are not very well. In other cases it might be because you are getting divorced”. Kate says if you’ve owned the home for 10 or more years, then you are likely to have made a lot of money on the property – it may be double the price it was worth 10 years ago, and if you have enough equity or own the property outright, says Kate “Don’t worry, when times are tough and you need to move on, it’s much better to sell and settle yourself into your new life than it is to worry about trying to wait and maximise your house price while spending several years being miserable or isolated”.
“Whether you are trading up or trading down” continues Kate “make sure you take your time to make the right move for you and your family.” There are lots of things you can do to take the stress away, especially if you are buying and selling. Take a look at Part Exchange deals – just make sure they are from reputable companies. Not all part exchange deals require you to trade up, there are developers and companies that will buy your property even if you are trading down. “Beware of the sharks” though says Kate. “Unfortunately the recession has brought out a lot of people trying to make a fast buck in property by offering to buy for 25-40% less than your property is actually worth. In comparison there are companies out there that will offer 10-15% and they are reputable”.
“Whatever your circumstances,” concludes Kate, “just make sure you work through your finances in detail and make sure you plan your property sale and purchase carefully”.
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