Article written and provided by Neil Jenman from Jenman.com.au . To see the original source of this article please click here. https://jenman.com.au/should-you-sell-in-covid-19/
IT DEPENDS ON ONE FACTOR.
by Neil Jenman
In normal times, this may mean higher prices, but these are not normal times. Normal rules no longer apply. In these times of COVID-19, one thing is certain: Thousands of home-sellers are withdrawing from sale. In addition, thousands are delaying selling.
One of the most common questions in real estate is almost the only question asked now.
“Is now a good time to sell my home?”
Many home-owners are not even asking this question. To them it’s obvious: These are frightening times. Don’t sell or buy now. Do nothing now.
But, is doing nothing the best for you and your family?
Have you thought it through? Or, are you acting instinctively: When in doubt, say no.
Fear is debilitating. Right now, it’s not only people in lockdown, it’s also ‘decisions’ and ‘actions’.
Many people are terrified to act. ‘No’ is an instinctive response. It seems the only word they can trust. Or the safest word.
What happened to the adage that crisis means opportunity?
What does Buffet say? “Be fearful when others are greedy. Be greedy when others are fearful.” When others are frozen you should act. When others are stampeding, you should wait.
So, what now? Is selling in a pandemic the right or wrong thing to do?
There is always a corollary to the “When to sell” question…
It depends on your CIRCUMSTANCES.
Your circumstances should be the main factor in deciding whether to sell. Indeed, many people feel your circumstances are the only factor.
No matter what is happening in the big wide world, what’s most important to you should be what’s happening in your little world.
If selling your home will improve your life now, sell now. If not, do not sell now.
Despite the fear gripping the country, many owners have sold their homes since the pandemic took hold. Selling suited their circumstances.
There are two aspects of circumstances: Your personal situation and the situation in your area.
For example, if you have found another home (after selling your current home), you may need money from your current home to buy your new home. So, yes, in such circumstances, if your finances fit, selling now is right for your circumstances.
But what if prices have dropped in your area?
Or what if prices may drop – as predicted by gloom-and-doom merchants who, like frogs after rain, are now making deafening noises.
If prices have dropped and you are buying in the same (or similar) area, the price of the home you buy should have dropped too.
Given that most people go up in price when they re-buy, a falling market may be ideal for them.
To use a simple example: If you are selling and prices have fallen ten per cent from, say, one million dollars to $900,000, you’ll feel like you’re “losing” $100,000. So, to prevent this “hundred-thousand-dollar loss”, you withdraw from sale.
Nothing has really changed. Except you feel better because you vow to sell when your home’s value goes back up to $1 million. You just ignore the price drop of your home.
This is what thousands of home-owners are doing now. Waiting for “things to improve”. Which means the only “boom” now is a boom in properties withdrawn by frightened home-owners.
Fear is the world’s number one reason for missed opportunities.
Yet, look what can happen if sellers focus on personal circumstances instead of economic circumstances.
While you may “lose” as a seller in a falling market, you can “win” as a buyer.
If you are buying a home that was worth two million dollars, it may have fallen ten percent which means you now “gain” two hundred thousand dollars.
You “lost” $100,000 when you sold, and you “won” $200,000 when you bought.
The property market in Australia is patchy. In some areas, prices seem to be falling. In other areas prices are holding and, dare it be said, perhaps increasing?
Therefore, it may be possible to sell in an area where prices are steady and buy where prices are falling. If these circumstances apply to you, you should sell and buy now. It’s right for you.
Or, it could go the other way.
Last week, a home-owner was told he’d be “lucky” to get what he paid for his home ten years ago. Such circumstances may justify doing nothing now.
Clearly, the answer to the question: “Should I sell now?” can be yes and no. It depends on the circumstances of the person asking the question.
What if you are not going to buy again, should you still sell during COVID-19?
Well, it depends what you do with the proceeds from the sale of your home. If you have a good financial adviser and you are advised to invest in, say, blue-chip shares based on the maxim of “buy in gloom; sell in boom” that may be good for you.
Just make safety and good advice your focus. If we took as much notice of safety in our financial health as we are taking with our physical health in this pandemic, there would be more financially healthy people.
Some owners are not selling because they are spooked that prices will fall. The doomsayers yell: “Property prices may fall 20 to 50 per cent!”.
But, if this is true, surely, we should all sell now – asap?
What if it is not true?
What if prices do not fall?
Or, if prices do fall, what if it’s mild – and short-term?
Do you sell then?
Or, maybe the opposite happens – and prices rise.
See how confusing it is to predict prices? Then stop trying to do what you cannot do and, instead, focus on what you can do, what’s best for you based on your personal circumstances.
A great investing book is ‘The Zurich Axioms’ by Max Gunther who writes: “Distrust anyone who claims to know the future, however dimly.”
The mathematician Sir Isaac Newton (1643–1727) was one of the most influential people of all time. Yet he infamously lost £20,000 (apx $5m Australian dollars now) investing. A chagrined Newton said: “I can calculate the motion of heavenly bodies, but not the madness of people.” So true.
If Sir Isaac could not predict prices, how can you – or anyone?
As mentioned at the start, thousands of sellers are withdrawing properties from sale. Once the pandemic is over, thousands of properties may hit the market. Will that lead to an increase or a decrease in prices? In normal times, it means a decrease. Won’t normal times be back?
It really ‘does your head-in’ making or hearing predictions based on unknown factors. The greatest stress in our lives comes from situations beyond our control.
If you thought of selling your home in the past, it may be time to do so again.
Sensibly, your most important question is: How will selling my property during COVID-19 affect my personal circumstances?
If it will improve your circumstances, sell. If not, don’t sell. That’s it.
Stay safe: healthy and financially.