Spoiler alert: you can’t.
Even though this fact has been common knowledge forever, it is still the most frequently asked question in our Ron & Don Sit Downs when we are strategizing about Real Estate.
The question comes in various forms.
- What do think is going to happen in the market [sometime in the future]?
- Is this a good time to sell (or buy)?
- The house down the street sold in 2 days for way over asking price. What will my house go for?
- Is the housing market crashing right now?
- These interest rates are crazy, amiright?
- Is it a good idea to just wait this market out?
It may not seem on the surface that these are market timing questions, but I believe that they are. All of them are attempts to divine information about the future.
Humans crave certainty. The higher the stakes, the more certain they would like to be.
Since buying and selling a home is the biggest transaction in most people’s live, the drive for certainty can be very powerful indeed.
I think there are only a few basic motivations that are hiding just beneath the surface of all of these questions: Fear, Envy and Greed.
Ouch – if this sounds like the plot line to the movie Se7en, don’t worry. It’s not that spooky.
I think the vast majority of people would not use these words to describe how they are feeling. People usually read it as anxiety or worry, but the fuel for the anxiety in my opinion is a combination of fear, envy, and greed.
What do I mean by fear? I believe people fear missing out, people fear looking stupid, and people fear losing what they already have.
Nobody wants to be the sucker. They do not want to be the one who bought at the top and sold at the bottom. They want to be the success story and be able to tell their friends and family that they made a great real estate choice and that they crushed it.
Envy is pretty straightforward. In the internet age, you can find out exactly what your neighbors house sold for. And with a little snooping around, you can probably figure out what they paid for it. A little back of a napkin math, and now you have concrete number in your head. If you’re competitive at all, you want to do better than them. You want to be the Unicorn listing that got 29 offers and went way over list price. The flip side for buyers, is you want to be the one that got “a screaming deal.”
Certain numbers seem to have a lot of power for some people. One million is one of those numbers for example. Sometimes a person will have an entirely unrelated number in mind and be disappointed when it doesn’t come in. For instance, “the house I want to buy next is this much – so that’s what I want to get on the house I’m selling.”
I’ve seen people that I thought I knew very well completely change when big numbers around money started flying around. I’ve had people stop talking to me forever over as little as $300 on a seven figure transaction. What’s going on there? Is it really about the $300 or was an unspoken expectation driven by greed violated?
So how do you “time” the market and avoid these traps of disappointment?
The first and most important thing to me is to examine your mindset. Having a healthy lens to view a real estate transaction can make the biggest difference. It makes me think of the famous quote by Henry Ford, ”Wether you believe you can do a thing or not, you are right.”
In other words, they way in which you are thinking about the result colors how you experience it as a good thing or a bad thing. We’ve had clients that were determined to be unhappy with any result. It really didn’t matter what we did, they had their mind set. The inverse is also true, we’ve had clients that weathered the same challenges and were thrilled to move on to the next chapter of their lives. The only difference, as far as I could tell, was mindset.
Second, recognize that real estate is different. It’s the only investment category that you can live in. So unless you are selling a true investment property that is not your primary residence, then the time to sell is when your life dictates that you should sell. It’s really that simple. If people were getting multiple offers on houses on your block but you didn’t want to move, then it doesn’t really matter if it happened to be a good time to be a seller.
Then a life event happened that necessitated you wanting or needing to move. The market conditions at play will be what they are. We have no control over that.
Third, do the work. For buyers, if you’ve worked with a lender, saved up a down payment, and cleaned up your credit history if needed – then you’re ready to go. You’re in the best spot to find your dream house regardless of the timing.
For sellers, if you’ve done the work to remedy deferred maintenance, and really put your best foot forward, the marketplace will reward you.
Warren Buffett once said, “The rich invest in time; the poor invest in money.”
I think he was right. If you’re playing the long game, the best way to time the market is to buy, hold, and sell when the timing is right for you.
If now is your time, let’s do a Ron & Don Sit Down and customize a strategy for you.
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