How do you feel about the property market right now?
It’s peak prediction season in the press, with daily claims from experts that house prices are about to fall off a cliff, stagnate or even slowly rise. We know that most of these predictions will be wrong, but which ones?
The first thing to remember is that asking prices and sale prices are not the same thing. If a home is 10% overpriced and then reduced by 10%, that isn’t a fall in sale prices. And if asking prices increase, like Rightmove says they have this month, it doesn’t mean sale prices have risen as well.
So what is actually happening?
One thing we can say for sure is that house prices have stalled, and the market has changed. But how does that affect you if you’re planning to sell your home?
Well, you probably won’t have queues of buyers down the street, or multiple offers over your asking price. But then, you’re unlikely to face that on the home you want to buy – an absolute godsend compared to the stressful scrums of 2022.
The best time to move is always when it’s right for you, but in case you feel you missed the boat by not selling last year, here are five reasons why you could be better off selling your home when prices cool.
THE DOWNSIDE OF RISING PRICES
It’s more expensive to move home when prices are rising if you’re upsizing or upgrading to a property with a higher value than your current one, and here’s why:
- Let’s say your home is worth £400,000 and the one you want to buy is £600,000. If you wait to sell until prices go up by, say, 10%, you’ll sell for £40,000 more, but you’ll pay an extra £60,000, leaving you £20,000 worse off.
- That could mean higher mortgage payments and debt, and less money to spend on improvements that increase the value of your next home.
- You could also discover that the forever home you’d set your sights on has increased in value beyond your reach.
So if, like most people, you’re moving home to trade up, the best financial outcome for you doesn’t rest on selling at the top of the market. It rests on minimising the gap between your selling and buying price to maximise your gain.
SELLING WITH LESS COMPETITION
When prices rise, it’s natural to think it’s the perfect time to sell because the value of your home has never been higher. It’s a feeling that grips the nation, but there are some advantages when you don’t follow the crowd.
- There are usually fewer homes on the market when prices cool because many sellers let the lower valuation of their home cloud the opportunity to move on up for less.
- When your home has less competition, it gets more attention from buyers on the property portals and also your estate agent’s website and social media.
- It’s just nicer – any agent will tell you that it’s possible to have too many enquiries, viewings and sales to manage, and that moving in a calmer market can be a much more relaxed experience.
Just remember to focus on getting a sale, rather than holding out for the last possible penny. To profit from the smaller gap between your selling and buying price, you need to have a buyer in place to boost your bargaining power on your next home.
MORE CERTAINTY FROM BUYERS
Buyers act very differently depending on the state of the property market. When it’s hot, they feel they should jump at whatever home they can get. When it cools, they take their time to get a better understanding of what they really like. And there are some real benefits to this slower approach:
- offers that are really well thought through and based on the certainty that your home is ‘the one’.
- less chance of buyer’s remorse, when the euphoria of winning the bidding turns into doubt around paying too much for the wrong home.
- an acceptance that, even if property prices fall in the short term (including while someone is buying your home), they’ve always recovered and risen far beyond their previous levels.
All of this gives you more confidence in having a smoother move with a fully committed buyer, rather than someone who’s keeping an eye on the market for a home that might suit them more.
LESS COMPETITION WHEN YOU BUY
One of the biggest problems you face as a seller in a rising market is getting to view a home you want to buy if your own home isn’t already sold. Estate agents are overrun with enquiries, and you simply can’t compete with an ocean of buyers who are ready and waiting to go.
This can be extremely frustrating and frightening. “What if I sell my home and can’t find one to buy?” is something we constantly heard last year, and a quieter market can offer some relief.
- Homes often sell as soon as they hit the market, and sometimes before that, when prices are rising. With multiple buyers fighting for every property, anyone with a home to sell goes straight to the back of the queue.
- When the market changes, many people decide to hold off buying until prices rise again, which is what’s happening now and why the rental market is so expensive and competitive.
- With more manageable numbers of buyers, estate agents can be more flexible around viewings with people who haven’t yet found a buyer, giving you a chance to see more homes and make a considered choice.
It’s a strange paradox that it can be harder to buy in a booming market because of the sheer volume of competition. Yet when things calm down, you often have more time to find and secure your dream home.
FEWER LEGAL DELAYS
Accepting an offer is cause for celebration as the first milestone of your move, but there’s still a long way to go before any keys change hands. First, you need to get through the legal process, and that’s where a booming market can get clogged up.
- Massive sales volumes can swamp solicitors with cases, slowing down the speed of every transaction. Last year, the average time from an offer being accepted to moving day hit five months – the longest we can remember!
- The same thing happens in the mortgage market as lenders groan under the weight of applications, resulting in delays to processing times, valuation appointments, and issuing mortgage offers.
- Expiring mortgage offers can leave buyers in limbo if their lender won’t simply extend their offer – they may need to start all over again, perhaps with a new lender, or even a different home.
None of this happens when the market slows down, because the legal process speeds up with a lower number of moves. Who knows what 2023 will bring, but if estimates of 25% fewer sales in 2023 come true, your solicitor and mortgage lender will be able to work much faster.
One last thing
When prices cool down, you need your agent to keep you ahead of the market to get you sold so you can negotiate the best deal on your next home. So quiz them thoroughly and ask for evidence to show how much homes like yours are actually selling for right now.
We’d love to help you make the most of the current market, so drop us a line at firstname.lastname@example.org or call us on 01384 958811 for a chat about your plans and getting your move underway.