by Neil Jenman
Reading Time: Apx 7 mins
Now is not the best time to be selling a home in most parts of Australia. Unless you absolutely must sell, of course.
The reason for making this call is based on one word – GLOOM.
One of the golden rules of real estate trading is this: “Sell in boom, buy in gloom”.
Unfortunately, most people – whether they are buyers or sellers – don’t take the time to learn the golden rules of buying or selling. Or indeed, any rules.
Most people have one way of deciding what they should be doing: They look at what the majority are doing. If most people are buying, it must be time to buy. If most people are selling, it must be time to sell.
Wrong.
The opposite is more often the case. Whatever most people are doing – in any market or with any commodity – is rarely the right thing to do.
There is a name for this phenomenon. It’s called the “herd” mentality.
Charles Mackay was a Scotsman. The Scots are renowned good money managers (just study how they sell their houses – no auctions!).
Mackay wrote a book called ‘Extraordinary Popular Delusions and the Madness of Crowds’. It’s described as “one of the great classic studies of crowd psychology, financial folly, and social delusion”. Mackay explains how entire societies can be swept up into “irrational conviction”.
Anybody who’s read Charles Mackay’s book would likely have sold their real estate last year.
And this year, they’d be thinking about buying.
Or waiting until prices drop even further.
How far will property prices drop?
When will property prices stop dropping?
When will property prices boom again?
Where is the best place to buy property?
The correct answer to these four questions is: Nobody knows. The only sure thing we know is that the opposite to what most people are doing is usually the best thing to do.
When the herd is stampeding in one direction, it takes courage to run the other way.
But that’s what you need to do if you want to increase your chance of success when buying or selling real estate.
Be prepared to be ridiculed, even abused. Be prepared to be called stupid.
That’s what often happens to me when I suggest doing something that’s the opposite to what most people are doing.
Back in 2021, I suggested that Bundaberg was a good place to invest in real estate.
I don’t think I have ever received such nasty abuse. I was told that Bundaberg was known as “Blundaberg”. It was supposedly the “unemployment capital of Queensland”. And the “obesity capital”. Apparently, the police called it “Iceberg” due to the proliferation of drugs. It was also the “domestic violence capital of Queensland”.
Nothing good to be said about a town I always liked. Indeed, nearby Bargara is one of my favourite places. I love it.
One critic ended his vitriol with these words: “The town has been dying for many years. Today, half the shops are empty, it’s like a ghost town. House prices may be low, but THAT’S WHY!!!”
So there, Neil Jenman, you fool.
Well, what happened?
As the golden rule predicted, prices subsequently boomed in Bundaberg. By early 2024, the “dying town” of Bundaberg recorded the highest price growth in all of Australia. Not just Queensland, all of Australia.
I couldn’t resist writing to those who abused me after my 2021 article. No replies.
In 2018, I had said Ballarat was worth considering as a place to buy. Based on my advice, my young son, Alec, bought a home in Ballarat. He was told, “Dad’s mad”. One of his siblings elected to have a new car instead of a house.
I don’t need to tell you the outcome. Today, his house has near-doubled. Not so the car.
The crowds are usually wrong. Oh sure, the crowds may seem right. But eventually the rule of buying in gloom and selling in boom seems to work.
I have a close friend who invested $400,000 in the stock market in March 2009, months after the GFC began. Another depression was surely coming. You’d be mad to invest now. This “mad friend” gave his circle of friends three words of advice about blue chip shares – “fill your pockets”. He bought Macquarie Bank shares for $19. Today, those shares are $246. His $400,000 grew to more than $4 million.
So much for the advice of crowds.
I don’t like seeing bad things happen – and certainly not to good people. It’s upsetting to speak with people who are now in (or heading towards) negative equity – in other words, their homes are worth less than their loan amounts.
It’s not pleasant to lose money by being forced to sell a home for less than you paid for it.
Therefore, if possible, now is not the best time to sell. Now is the time to hang on. Wait for things to improve. Or, at the very least, take the time to do plenty of research – on your own life as well as on the best ways to get a good result in a bad market.
For example, with interest rates so high, it means that the cash you receive from a sale will grow faster than when interest rates were lower. If you sell now at a lower price and invest the money, you may soon offset the amount by which you had to drop your price.
Remember this: No agent deliberately refuses to sell a home. But, of course, the easiest thing for an agent to do is ask you, the seller to drop your asking price.
If you are being pressured to lower the price of your home, this does not necessarily mean that you are “losing”. For example, if you want to sell for $3 million and you are being asked to lower your price to $2.5 million, it does not mean you are losing $500,000.
Sure, it may feel like that, especially if you have been mentally spending the money (in your head).
But you can’t lose what you’ve never had.
And sometimes, yes, if you do have to sell, it’s best to take the best that you can get. And then get on with your life.
In the great scheme of things, you are only talking about money. And money, surely, is not the most important factor in your life. It’s what you do with the money that’s important.
Sometimes I feel like saying to people: “When you die, will you have $500,000 in assets?” The answer is, “Of course.” Well then, why not take that $500,000 now and lower the asking price of your home – and get on with your life? While you are still alive.
How can you ask for more than the best price that’s available in today’s market? If you want to sell for yesterday’s price, you should have sold yesterday. But no one has a time machine.
So, either don’t sell in the current market or be prepared to accept the best price that you can get in the current market. But don’t let your home languish unsold for months; that will do even more damage to its value. It’s hard to escape the modern digital footprint.
Unfortunately, the first thing most agents do when a home is not selling is suggest that the owners lower their asking price. But lowering your asking price should be the last thing you do, not the first. There are many things an agent (and an owner) needs to do before they lower their asking price.
Any home can be sold at any time if the price is low enough. The secret is to be sure that you sell for the best price possible. This is where, as a seller, it’s important that you know when (or if) you really are being offered the best price.
So many times, agents present offers to sellers with the words, “The buyers won’t pay any more.” The sellers refuse the offer. And then the buyers increase their offer. The sellers then rightly think, “If I had listened to the agent when we got the first offer, we’d have missed out on getting the best price.”
Other times – and this is happening increasingly often in the current market – sellers refuse an offer and the buyers walk away. Six weeks later, the sellers regret not accepting the earlier offer.
So, be sure you know that the buyers are indeed offering their highest price.
The best way to know if buyers are offering their best is to insist that your agent uses a ‘Buyers Price Declaration’.
Most of Australia’s agents have had life too easy for too long. They have either forgotten how to sell or they have never learned how to sell. As for negotiation skills, most agents are hopeless.
This is why it’s critically important – indeed it has never been more important – that sellers have a basic understanding of how real estate should be sold.
Sellers need to know answers to many questions, especially: “How do I know when the buyers are offering their best price?”
Or: How do I know when is the time to reduce my price?
Or: What do buyers find most attractive in a home?
Or: Is it worth paying for staging?
Or: What is the best form of advertising?
These are important questions. The book, Questions Every Seller Must Ask, has more than 200 questions, many of which can mean the difference of tens of thousands of dollars to a home seller.
As the author of that book, I will guarantee that, if you are selling in today’s market, this book will show you how to save tens of thousands of dollars.
If not, I will refund the cost of the book. And you can keep the book.
Each day, homeowners ask us questions about selling their homes. Those questions are all answered in the book.
Frankly, unless you must do so – or unless you are buying again in the same market – I would advise you not to sell now.
But if you must sell, give yourself the best chance of getting the best price.
Be prepared. Get the book Questions Every Seller Must Ask.
If you have any questions not covered in the book, you can contact me, the author. I will always do all I can to help you get the best result whenever you’re selling your home.
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