A simple question — “When should I sell my property?” — has, as you might expect, no single or simple answer. The timing of any sale depends on many factors operating on the seller. The strongest pressures often have nothing to do with the property itself.
Here are several broad principles that usually — but not always — apply in these decisions.
1. Don’t sell when there are a lot of properties like yours for sale in your area, unless you are in a hot seller’s market.
Competition among many sellers with essentially the same product inevitably means advantage to buyers. That usually plays out in a buyer playing off one seller against another. In a buyer’s market, the seller’s asking price will be discounted and his ability to hold to a wanted price is weakened.
Unfortunately, the economic forces that depress the economy and real-estate sales in particular, also corners sellers into having to sell their property because they have to.
If you don’t have to sell in today’s market, don’t put your place up for sale. Wait.
2. Sell investment property when you can use the sale profit to make a better investment.
This requires that you have a reasonable sense of how the property you own will appreciate in the future as well as how your next target property is likely to appreciate. This amounts to combining trend analysis with a crystal ball.
Consider using a 1031 exchange to protect your gain going forward.
3. Sell when you’re sick of fooling with a property you hate.
Some properties are just one headache after another. If they’re making money, you have to decide whether you value the net (not the gross) more than the headache. I start getting headaches when dealing with house tenants, but that’s just me. I’ve had good experiences with hunting and pasture tenants.
Fix-up places are always good candidates for headache properties, particularly if you’re living in the middle of the work…and you’re married.
4. Sell when all the other choices you have are worse.
Things don’t work out well sometimes. And at other times, things work out so badly that you have to choose between dreadful alternatives to muddle through.
The one time I was in that situation I found that making a decision to sell a very smart real-estate investment into a bad market was made for me. I had no other choice.
At such a point, you do what you have to do, sell what you have to sell, and don’t waste time and energy stewing.
5. Sell investment land when you don’t have to.
Lack of pressure on sellers to sell provides flexibility and the ability to hold for the right deal. When you’re in this fortunate position, look for advantage in terms if you and the buyer get stuck on price.
6. Sell farther out rather than closer in.
My experience has been that every single land investment I’ve had over 40 years would have sold for more if I had held it longer. I cannot say the same for stocks, that’s for sure.
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