COMMENT: The two most frequent questions I’ve had over the past few weeks are “Should I buy right now?” and “Should I sell right now?”. This is understandable. People are uncertain about what’s going to happen to the property market, and they don’t want to lose money by paying too much or accepting too little for a property.
My advice in respect of the first question is simple: now is always the right time to buy. I know that’s a cliché but it also happens to be true and my heart goes out to those who have failed to take that advice, over the years, thinking they knew better and could time the market, only to miss out because the market turned when they least expected it. Yes, it’s possible that you might pay a little too much in the short term, but the medium to long term trajectory of the market is always up.
But what about selling in the current climate? To some degree, the answer to that question depends on where you are. If you’re in regional New Zealand (most places outside Auckland) then, in my opinion, you’re in for three or four flat years where house prices don’t move very much, so you might be waiting a while for prices to take off again.
If you’re in Auckland, I’m still of the view that the current uncertainty will dissipate and that we could still see modest growth in Auckland house prices, even as soon as later this year. I base that view on the cyclic patterns of the last four decades, but I should stress that I’m completely alone in that view and that other commentators are predicting ongoing drops, even in Auckland, so treat my words with caution.
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As it happens, I wrote an article on this topic almost exactly three years ago, and the advice that I gave at that time still stands. If you need to sell, there are a few things that you can do to maximise your position:
1. If you don’t actually need to sell, don’t
Downturns are a perfectly normal part of the cycle and, typically, last between four and five years before the market starts tracking up again. Be warned, though: you may see further erosion in the “paper value” of your home before that upswing comes. But if you can wait it out, you will generally be rewarded as the market rises over the medium haul.
2. Be realistic about price
Forget what you were being told your house was worth three months ago. The environment has changed and you need to adapt to the new reality. The more realistic you are the greater your chances of selling within a reasonable time. Most agents will provide you with something called a market appraisal, but if you want a more accurate guide, spend some money and have the property properly valued by a registered valuer. Knowledge is power.
3. Use an agent
It might be tempting to try and save some money by managing the sale yourself, but the right agent is worth their commission many times over. Selling a home is a specialist skill. Leave it to the experts.
Ashley Church: “The [housing market] has changed and you need to adapt to the new reality.” Photo / Ted Baghurst
4. Give yourself as long as possible to sell
The average time it takes to sell a home is increasing in most parts of the country, so putting yourself under tight deadlines will increase the pressure to make rash decisions. Be prepared to have to wait.
5. Think twice about selling at auction
This comment will earn me the wrath of every real estate agent in the country, but it’s a simple fact. Auctions are a great way to maximise price competition in a rising market, but they’re little more than a tool by which to condition your price expectations in a flat market.
6. Present your home as well as possible
Presentation has never been more important, so make sure that your house looks great and that those niggly maintenance issues have been seen to. If they’re obvious to you, they’ll be obvious - and potentially off-putting - to a potential buyer.
7. Don’t take it personally
It’s a buyer’s market right now, so it’s likely that any initial offer will be disappointing. Generally, there will be room for some negotiation on this so keep your eye on the bigger picture. Don’t lose a sale out of pride or a misplaced sense of the value of your home, particularly if buyers aren’t beating down your door.
8. Don’t buy until you’ve sold
Doing this is risky in any market – but entering into a contract to buy a house before you’ve sold the one you have is a recipe for disaster and simply not worth the anguish. Don’t do it.
- Ashley Church is a property commentator for OneRoof.co.nz. Email him at [email protected]
