Selling your house can be one of the biggest challenges you’ll ever encounter in your life. This is not only because of the time and money spent investing in it and your accompanying emotions, but also because of economic factors. But is it wise to sell your house during the Covid-19 pandemic?
In this part of the Covid-19 content series, we find out if you should sell you house while we’re still fighting the Coronavirus.
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When is the right time to sell your house?
Experts agree that people sell their houses for a number of reasons. These include retirement, upscaling due to expanding families, downscaling as the children move out, financial strain, job relocation, or for profit. But putting your house on the market doesn’t mean you’ll have buyers queuing for it. Some houses take longer to sell, while you may be lucky to have your house sell fast.
The condition, location, and price of your house are some of the major contributing factors to whether your house sells or not. If it’s in a bad condition, undesirable location, or too expensive, it will probably take longer to get rid of. The other factor that one needs to consider is the property cycle.
“You need to take into account whether you’re in a buyers’ or sellers’ market. This will allow you to understand the price you can achieve,” says Hayden Giger, growth head of FNB Private Bank Lending.
A buyer’s market is when there’s an excessive supply of houses in the market compared to buyers whereas a seller’s market is when there’s excessive demand by people who’re looking to buy houses.
READ MORE: Is your home correctly priced for the market?
You want to make sure that you don’t over or under price your property as both have negative consequences, says Giger.
He says you need to consider whether you’re willing to accept a sale subject to the purchaser buying your property.
“Take into account the costs that you will incur in both the selling and purchasing (if you’re buying) of the property. Research the various channels you can use to sell your property, estate agents, private selling, and online auctions,” he advises.
Erwin Rode, CEO of Rode and Associate s, a property evaluation company, had this to say: “The house-price cycle is very long (15-20 years) and the best time to sell is of course when near the top of the cycle. That’s the theory. The last top in prices was 2008."
“One often wants to or needs to sell for reasons like scaling down, moving to another city or retirement village, or illiquidity. Many a time you have no control over these triggers. This underscores housing’s soft underbelly: it’s illiquid. However, in the long run (15-20 years), it should provide a total return of about 3-4% above the inflation rate. Total return means income return plus capital return,” he says.
Should you sell your home in this time of Covid-19?
According to Giger, this is an extremely difficult question to answer as the true effect that Covid-19 has on the property market hasn’t been seen yet. He says all indications are that the pandemic will stifle the market for a period of time.
“During this time of uncertainty, one should decide if selling their property is a necessity or a ‘nice to do’.
“One of the positives about selling a property in this time, is that the prime lending rates are the lowest that they’ve been in decades, and this will allow more prospective purchasers onto the market,” he adds.
Ideally one would wait for the summer time when the garden looks pretty and it’s a sellers’ market but that’s not always possible. The right time would be once you have engaged with various professionals to get a broad spectrum of information and considered all your options.
“It obviously depends on your personal circumstances. If there’s no urgent need to sell, I would rather ride out the recession – which is going to be a few years,” says Rode.
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