The key to buying and selling in this market

The Changeover Price

A drop in property prices always creates good trading opportunities that can benefit many buyers and sellers.

Irrespective of what the market is doing, the most important number to consider when buying and selling is the changeover price. The key is to transact intelligently instead of being emotionally attached to a price. Pride can be a seller’s worst enemy in a falling market. Many people mistakenly focus only on their selling price. But, if you sell high in a good market you will also buy high. The same thing applies in a down market, when you sell low you will also buy low. The state of the market hardly matters if you are buying and selling in the same market. In fact, many buyers and sellers can end up financially better off when the market is down.

Families upgrading their home are winners when the market is falling. But if they focus on how much their existing property has fallen in price, they will miss the opportunity to upgrade. The reason upgraders are the ultimate winners in a falling market is the property they are purchasing drops in value more than the property they are selling. If you are selling a $1 million home to buy a $1.5 million home, a 10% drop in the market means your existing home drops $100,000 but the home you are purchasing has dropped by $150,000. This means you are $50,000 better off than when the market was up.

The falling market also provides an excellent opportunity for first home buyers to enter the market. Additionally, investors and families relocating to more expensive suburbs are all better off financially transacting in this market than in a boom market.

Conversely, some people are resisting current market prices because they are downgrading, therefore losing on their sale and not gaining enough on the purchase. Their dilemma is whether to sell now or wait for a rebound in prices. But how long do they have to wait? It could be several years. They have a choice to make between improvement in lifestyle and a quality life they can enjoy now if they sold, or waiting it out and putting their lives on hold indefinitely.

Most people downsizing are elderly and my advice to them is this – “if the price you get today allows you to make the move and improve your lifestyle, don’t let price stop you from enjoying life now. None of us know how long we have left, enjoy each day while you can”.

About The Author
Paul Kounnas

Paul Kounnas

For nearly 40 years, Paul Kounnas has been helping people buy and sell property in and around the Manningham area. In 1993 Paul established Hudson Bond Real Estate and he is recognised as one of the most respected, prominent and knowledgeable members of his profession. A licensed Real Estate Agent and member of the REIV and the International Real Estate Federation (FIABCI), Paul provides regular expert advice and information on all matters relating to real estate.

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