Should I stay or should I go?

By your real estate dude

This may sound like an old song from The Clash, but it truly is a dilemma for many when it comes time to decide whether to sell or buy a home. It’s quite common for this simple question to lock people in the limbo world of analysis paralysis. This occurs when too much information, conflicting opinions and fear leave the person completely absorbed in the information but unable to make any sense of it all.

The other day I had a client look at me over the top of his newspaper as I walked up to meet him for coffee. He had the most exasperated look on his face as he announced, “Every time I read the paper, I’m more confused than I was when I started.” In his case the conundrum is whether to sell his home now or hold.

I was at a church event recently when a fellow I’ve known for many years asked the age old question “so, how’s the market?” This gentleman has been asking me if he should buy a house for years. I keep saying yes and he keeps putting it off and asking me the same thing at the next available opportunity. So, I took a couple of minutes to explain the current “buyer’s” market, the low interest rates, the reduction in prices and the deals that many sellers are willing to make in order to sell their homes. He looked at me as if I had ten heads and said, yet again what he always says, “I’m going to wait to see if prices come down.”

Almost without exception the struggle over “should I stay or should I go” revolves around home prices. Let’s face it, if you have a job transfer and have to move, the question is moot. Likewise, if your finances are in disarray and you must sell or are forced to wait until things improve in order to buy, the “should I” question never comes up.

After years of witnessing this struggle to understand what to do when prices change, I have come to the conclusion that it all stems from a misunderstanding of an old, but tried and true rule “buy low and sell high”. I first heard of this rule when I was a kid. My grandfather was quite the real estate investor and rattled this rule off to me on a number of occasions when I was a small boy. One day he asked me to repeat it. When I did he said, “Now remember, the rule is buy low and sell high. It’s not, buy lowest and sell highest”. This meant nothing to me at the time, but much later it was quite a revelation. I came to understand that if I bought when prices were low and sold when prices were high, I made money. It didn’t matter that I never seemed to catch the absolute bottom or top of the market. This may seem so simple as to be hardly worth mentioning, but I have witnessed many an enterprising individual lose money trying to hit the absolute high or low. Does this remind you of the fellow I mentioned earlier who is always waiting for the bottom of the market? If he had purchased a home the first time he asked me, “so, how’s the market”, the home he would have purchased would now be worth a fortune and he would be much better off.

Given the current “buyer’s market, if you are thinking about buying, the “buy low” rule is in full effect and now is the time. Prices are lower, interest rates are still low, lots of properties are for sale and sellers are willing to make deals. On the other hand, if selling is on your mind, it may not be the best time unless you purchased the property some years ago and have significant equity. In that case, you bought low and even though the market has softened you can still sell high because of time. If the equity isn’t there, my advice is hold off for a while. Time will tell, but the chance to sell high may come your way sooner than you think.