Some people sell to retire and buy something smaller. This article does not refer to them. But the majority of sellers at any given time is trading up to a bigger property to house their growing family or reflect their increasing wealth. These home owners – who will pay more for their next home than they will get for the one they are selling – actually do better when the market is on the decline. The fact that they are spending more money second time round gives them an opportunity to make money on the transaction. If the reason they think it’s ‘not a good time to sell’ is because they ‘will not get a good enough price’ for their home, then the logical next step is to realise that if the market prevents them from getting the price they want, it will also affect the sellers of the property they are trading up to – with a net gain to the person who is trading up. If you get $603,000 for your home which has been valued at  $670,000, you may feel you are ‘losing’ $67,000 or around 10% of the value of your asset, but if you buy another home valued at $850,000 in the same market,  the owners of that home will also ‘lose’ 10%, as you will naturally not be paying more than the current declining market value. In paying 10% less you will pay $765,000, ‘saving’ $85,000 – thereby ‘making’ $18,000 on the transaction; in other words you ‘saved’ on the next transaction more than you ‘lost’ on the sale of your current home, so you are ahead by $18,000.

In fact, there are other advantages to trading up in a buyers’ market. Because prices are stable and properties often take longer to sell, once vendors have sold their original property there is no rush to buy. They can take their time choosing and negotiating their next purchase without having to watch the gap between the price they got for their original property and the price they have to pay for their next one increasing at an alarming rate.

If you answered that you would prefer the money it is likely that you have just lost money.

While for some people it may work out well to stay in their homes longer, it is important to understand what holding out for more means in dollar terms to most people. 

‘Time is money’ is a cliche that in this instance is likely to be true. In financial jargon, this concept is called ‘opportunity cost’. It refers to the amount you have lost by not having the money for a certain period of time

Ask yourself what you would be doing with the money if you already had it in your hand. For example if you sell for $500,000 you could be earning 7% interest in the bank – that is $675 a week

Or you could put the money against your mortgage at say 9% and you would be saving yourself $865 a week. 

There are two ways you may be likely to have your settlement delayed. One is when a buyer asks for an extended settlement, the other is when the seller holds out for a high price that may or may not happen.

In the first settlement delay scenario, a buyer making an offer may work with whatever time component you have stipulated in your contract or they may ask for a delay in settlement. The offer itself may seem OK, but as you can see from the above figures, if you could be doing something else with the money, then their long settlement needs to be balanced by a higher offer. 

The second delay scenario is usually caused by the seller holding out for an arbitrary price  that is based not on market research but on ‘we need to get $x in order to buy what we want’. If the market is turning and prices are dropping then such a seller could end up getting a lower price by holding out too long, and this too must be added to the ‘opportunity cost’.

Bridging finance expands the cost of waiting even more as short term bridging finance is one of the most expensive home loan packages.

It is so easy for people to get tunnell vision when it comes to understanding that ‘more’ in price terms is not necessarily ‘better’ in net financial  status. Time and pricing factors need to be taken into account when assessing financial strategy to maximise financial outcomes.

Deceased estate sales usually create a lot of interest amongst buyers. Interest is just what is needed to create the competition necessary to achieve the highest price.

But this is where the easy part ends. Often the new owners don’t really know each other very well and sometimes their interests appear to conflict.  Who will decide on the method of selling? Who will decide on what kind of advertising? The acceptable price?  Whether the decision is made ‘in committee’ or one person is appointed to speak for all, complications are still likely to be the order of the day.  

It is probably not surprising that price usually creates the most dissension; after all differing levels of real estate knowledge are likely and some beneficiaries may not even live in the area. Naturally it makes a big difference if the method of marketing selected is one that proves to all parties that the best price was obtained.

Private treaty is often not suitable as a method of selling a deceased estate because the parties involved frequently can’t even agree on an asking price! And it doesn’t always work to put the property on at the highest price suggested. If the price is set too high, the property may take a long time to sell. The ‘deceased estate’ tag loses its power to attract interest if the property is seen by buyer after buyer whose offers are refused or who fail to make offers because of the price barrier. As time goes on, the property becomes stale, and many properties become less appealing, especially if the burden of cleaning and garden maintenance becomes yet another cause for dissension amongst the beneficiaries. In the long run, leaving the house on the market when no one is living there can reduce the market appeal and subsequent offers can be lower than early ones.

Auction is often the fairest and least conflict-ridden method of selling a deceased estate because instead of having to decide on the price tag, beneficiaries can wait to see what the competition generated will bring in the way of offers. It also avoids the risk of the property becoming stale if it lingers on the market at a too-high price.

If the market is getting weaker, then they have more time to buy without seeing prices getting away from them. When it’s getting stronger, many wish they had tried to make up their minds sooner to avoid missing out or paying more. So what are the signs of a market on the move?
 

Trending Up:

If the market is trending up (i.e prices are likely to rise), watch for:

• Properties that have been on the market for a long time are selling.
• Increased attendance at Open Houses.
• Increased bidding at Auctions.
• When you ring an agent about a property, you find they are already sold or if you ring back to make an offer you find that someone else has got there first.
• Even really challenged properties are selling.
• Sales at auction go above the reserve set by the vendors.
• Gazumping is occurring.

Trending Down:

Conversely, purchasers can take their time if the following signs of a market slowdown leading to lower prices are occurring. Watch for:

• Little interest at Open Houses
• Many of the properties for sale have been on the market for a long time
• Auctions have no buzz and bidding seems to proceed very slowly
• Auction prices falling below reserves set by vendors
• More properties passed in at Auction
• Properties selling before Auction

Many home owners realise that by the time they sell (homes sell on average every seven to ten years), energy-savvy design will be even more highly sought after as energy prices come to match environmental impact concerns.

Read on to find out what’s involved in incorporating passive solar design into your building or renovation project.

Passive solar design – in its simplest form – means keeping the heat of the sun out of the home in summer and attracting the sun inside in winter. Most passive solar features cost little or nothing if incorporated at the design stage so if you’re building or renovating a home, it’s worth talking to whoever is designing your home.
The following points will help you ask the right questions and get the energy efficient outcomes you are looking for.

1. Orientation
Orientation comes down to intelligent use of the sun. It doesn’t cost anything but the decision about which way the home will face must be made before the foundations are laid. Choose the ideal direction to maximise sun use during winter and restrict sun use at the hottest times of year (in the Southern hemisphere this means a north orientation for day use areas and south for night use).

2. Zoning
Clever zoning means placing the daytime areas of the home towards the northern side and the night time areas to the south or east (it’s easy to stay warm in bed and days are spent in the living areas.)

3. Glazing
Well-placed and well-sized windows reduce the need for artificial lighting during the day. At the same time, the fact that glass is a poor insulator needs to be taken into account; double glazing or some other form of insulation such as heavy curtains may be necessary at night time or on sunless winter days in most climates. Unprotected single-glazed windows lose ten times more heat in winter than the same area of insulated wall. Windows can also be designed to let sun shine on interior walls and floors that can be built of materials that have the thermal mass to store it.

4. Insulation
No matter what the climate, insulation for walls, roofs and floors is crucial in energy-efficient design, keeping heat inside the house during winter and outside in summer. In some cases the building material itself may be the insulator (e.g mud bricks, double brick).

Most experienced agents will tell you that anything overly contrived and unreal is unlikely to convince purchasers to believe in (let alone identify with) a lifestyle and is therefore unlikely to make them feel like making an offer.

Many home sellers like to display pictures of super attractive people such as models or celebrities in their house as opposed to the “normal-looking” people who actually live there. This might seem like a good subliminal selling trick suggesting the upmarket, perfect lifestyle the current owners have and by association, the upmarket, perfect lifestyle buyers will live if they buy the house. The problem is, most buyers spot the trick and are put off by it. A better idea would be to hire some ‘good’ paintings to use in the staging of your home rather than pretending to be a cast member from “Sex and the City’ or The Bold and the Beautiful”.

The smell of fresh coffee might be convincing but putting flower petals in the master bathtub or tinting the water to match the décor is another overly contrived gimmick. Buyers know you don’t actually live this way and instantly feel they are being set up.

A well-staged home shouldn’t look obvious or contrived – it should look effortless and stylish as if efficient but busy people with good taste happen to live in the home.

The obvious answer is to keep the tenants in residence. This incurs the least loss of income and unless the house is really dirty and untidy, a house usually presents better with furniture and household items making it look lived in.

However, there are times when a tenant in residence could be a financially less rewarding scenario. Tenants who do not want to move can put a lot of obstacles in the way of a sale. They can limit and postpone inspection access almost at whim in spite of legally having to provide ‘reasonable access’ (what is ‘reasonable’ to one person may not be ‘reasonable’ to another). By the time this sort of obstacle is sorted out, valuable time has been lost and many purchasers have moved on. If the market is not trending up, this can result in a lower sale price as the market drops before the property can be sold. Furthermore, if the seller is using the money for another financial project, delays in having the money available could cost them the project or render it more expensive if bridging loans are required.

Disgruntled tenants can also highlight the property’s faults in order to put off prospective purchasers and while many owners are happy to absent themselves from the property to allow the agent to show the purchasers around at their leisure and improve their selling prospects, tenants have no such motivation to leave the property and many reasons to stay watchfully present.

Sometimes property owners have no inkling that tenants will behave badly in the event of a sale, but there is a bit of basic research investors can do to try and determine whether their tenants will play ball. Ask your agent how easy it has been for the agent to get access for periodic maintenance inspections or for tradespeople who have been contracted to carry out work on the property. Tenants who have been slow to concede access for activities such as repairs that will benefit them are highly unlikely to come to the party when they think they will ultimately lose their home to a successful purchaser.