Will you win selling your property in the current market?
Well, this is a loaded question… and most of you are no doubt asking yourselves how can you possibly make a profit selling in this market.
The simple answer is it is a matter of perception. If you bought your property say (let’s just look at a 1 Ha block on which you have done absolutely nothing) for $60,000 in 2000. By 2004 the price had moved up to $90,000 and then it jumped in 2005 to $120,000 by 2006 the same block was selling for $160,000 and in 2007 you put it on the market at $245,000 and which was considered a ‘fair market price’ by your selling agent. Now, the very same block in the current market is worth $170,000. It’s on the market for $195,000 and someone makes an offer for $170,000.
What are the various perceptions and by whom?
To the agent… Well markets go up and down. Perhaps I should have sold it when the market was high but I wasn’t ready then and I’m still making well over 100% on my original investment and I can use the money to upgrade to a better house before the market starts going up again. Do you think I could come back at $175,000?
To the agent… you have already put it on at below what its worth and I have already lost $50,000 on it and you now expect me to accept an offer for $170,000 that will be $75,000 I’ve lost all together. You can’t expect me to lose that much… I won’t accept anything less than the asking price.
To the agent… Wow that’s great after all I only bought it for $60,000 that’s nearly a 200% return in a bad market and I could really do with the cash right now. That’s great let’s accept the offer.
To the agent… It’s a buyer’s market at the moment and we’ve all been burnt one way or the other so do you think the owners would accept an offer of $170,000 I think that’s a good price for the block from the research I’ve done but look if he insists on a bit more I’d go a bit more because I really like it and after all we are all in the same boat aren’t we?
To the agent… I want to make an offer of $100,000 that’s all its worth at the moment. All this property is overpriced and anyway how do we know that the market isn’t going to carry on going the same way and we’ll lose money on it.
To the agent… I want to make an offer of $170,000 … that as much as we can afford at the moment and the banks won’t let us have any more. Do you think you the owners will accept our offer? We just can’t go any higher because we have to build on it. It would be great if they did can you try your best for us because we really like it.
There we are, same block, same price just people perceiving profit and value in different ways. As the saying goes … One man’s meat is another man’s poison.
Perceptions are a challenging issue and quite often when we are emotionally involved (as we normally are when buying or selling a property) we actually find it quite hard to see reality. No one is going to lose out by selling a block that cost them $60,000 for $170,000 or are they?