When people find out that I work for GSPC, there’s often a good deal of chat about property one way or another. And judging by those conversations, there are a fair number of homeowners who would like to move, but have held off putting their home on the market because they are not sure the time is right.
All of which is to say that one of the questions I am asked regularly is ‘when should I sell?’. The flippant answer, which I don’t use that often, is ‘when you want to move’. But what people really mean by that question is; ‘when is a good time to get the most for my property and still get a good deal when I buy my next home?’
If that is the question going through your mind, allow me a moment or two to set out why now might be a particularly good time to sell.
Sales are up, stock is down
You may not have noticed, but the total number of homes for sale in the west of Scotland has been falling very gradually since what looks like a peak last October.
In part, this is down to more homes finding buyers. Sales through GSPC members in the first five months of this year are almost 10% up on the same time last year and the pace has been gradually accelerating as the year progresses. Nor are we the only ones to notice this trend. RICS Scotland reported recently that sales in the UK over the past three months have reached their highest level since January 2010. Moreover, Scottish surveyors are predicting higher sales over the next three months and in the longer term.
In other words, you stand a better chance of selling your home now than at any time since early 2010.
The other reason for the fall in the number of homes for sale is the dearth of homes coming on the market.
At this time of year, the number of homes for sale usually rises sharply. In 2010, for example, the total number of homes for sale rose by almost a quarter between January and May. That hasn’t happened this year, largely because would-be sellers a staying put.
That means that sellers who do put their home on the market face less competition for buyers at a tine when sales are rising.
Avoid the rush
Conversely, at some point the tide will turn and everyone will decide now is the time to sell. And given that there is considerable pent up demand to move, there could be quite a rush of homes coming on the market when sentiment does change. That means that your home could be competing with many more homes than it would be if it was for sale now.
But what about prices?
There is an assumption that it is best to sell your home when prices are rising. But that is not necessarily true. If prices are rising, you might get more than you expected for your current home. But you will also have to pay more for your next home. And since sensible people prefer to sell before they buy, you will be offering for your next home some time after you have sold your current home, risking the prospect that prices have risen further by the time you find what you are looking for.
I suspect, however, that that is a largely hypothetical argument for now. It is highly unlikely that prices are going to rise or fall significantly for some time, probably years. You can safely ignore the news about prices in London which has its own property micro climate. The truth is that property prices are determined by local economic conditions and particularly by growth in real incomes. It will take some time for incomes to recover from their recent battering and to outpace inflation. Until that happens, prices won’t rise strongly. So, if you are really waiting for a market typified by rising prices, you could be waiting for a very long time.
Cash is king
If you do sell now, that will make you a cash buyer – and there is nothing that a seller likes better than a cash buyer (or someone with a deposit which means that the mortgage is straightforward). That puts you in a very strong bargaining position compared to other prospective buyers who have yet to sell and means you could secure a property ahead of buyers who might offer more but who don’t have the funds to go ahead until their own has sold.
Why not wait?
But, even if all of this is true, you ask, wouldn’t I do better to wait a little longer? After all, the mortgage guarantee part of Help to Buy, which should increase the number of buyers in the market, will start next January.
That’s true. But Help to Buy may be just the signal that a lot of would-be sellers are waiting for before putting their home on the market. That’s particularly true for sellers with relatively little equity in their home who need a 95% mortgage (or something like it) to be able to buy their next home. The risk is that your home will get swamped as others come on to the market.
It might be a different matter if prices were likely to rise next year and waiting a little longer would make a material difference to the selling price. But that doesn’t look likely, so there’s a good argument for selling now before everyone comes up with the same idea.
In short, if you want to move, there’s a very good case for doing so now rather than later. If, on the other hand, you are waiting for a return to the boom times before 2008, you may have a very long wait ahead of you.