No one likes to sell their home when property prices are dropping. It's mentally challenging to accept a sale price which you know is lower than you would have achieved 6 months ago.
But what if I told you that you could actually save money by moving in a buyer's market? What if you could come out financially better off overall, even while selling your home for less than what it would have been worth at the peak of the market?
To see how this works, you have to consider the whole picture.
Let's say you want to move to a bigger home. And let's imagine at the peak of the market your property was worth $900,000, and the type of property you wanted to move to was around $1,200,000.
Now, if the market has dropped 15%, your home is potentially worth $765,000 (ouch!).
But (and it's a big 'BUT'), the home you are wanting to move to is now worth just $1,020,000. So the value of your own home dropped $135,000 but the price of your new home dropped $180,000!
At the peak of the market, the gap between your current house and your next home was $300,000. Now, the gap is only $255,000.
In other words, the overall move is costing you $45,000 less than it would have at the top of the market.
Let that sink in for a moment. You might feel like you are losing, accepting $765,000 when your home was worth $900,000 a few short months ago. But in actual fact, you will come away from the whole moving process having saved $45,000.
With that sort of saving you could potentially pay off your mortgage a whole lot quicker, saving a serious amount of interest in the long run.
Speaking of interest, it's important to note that interest rates have a massive influence on the affordability of any purchase amount. And buyer's markets often come with higher interest rates, so it's important to seek professional advice before making any kind of real estate move, especially when it involves taking on a bigger mortgage.
That's not the end of the story though. There are other benefits to moving in a buyer's market:
● When the market recovers, you will enjoy the capital gain on a higher-value asset.
● You will have far more houses to choose from.
● There will be less competition from other buyers, which increases your chances of securing a home you really like.
● In a buyer's market, it's easier to negotiate conditions that work for you, like extended settlements, due diligence periods, or even subject-to-sale conditions so you don't have to commit to selling your own home until you get your next home under contract!
If you have seen the value of your current property drop over the last few months, don't feel hard done by. Remember that it's all relative. As we say in real estate, "when the tide goes out, all boats go with it."
If you are thinking of making a move, now could be the best time to do it.
Ready to talk about your options?
Get in touch with Mulholland Property today. We can provide you advice on what your property could be worth in the current market, along with tips to help you secure the best possible price if you decide to make a move.