Investing in real estate relies heavily on timing your buys and sells. As property prices change due to supply and demand, missing your cue means losses. Some of those you can quickly recover, but others could be substantial–and all because you were holding on too tightly.
Why People Buy When They Do
When everyone you know is selling their property, you feel the pressure to do the same. The idea that there is safety–and knowledge–in numbers could be your downfall. When there are too many properties for sale at one point, there is an imbalance in supply and demand, which results in lower prices. This may not seem like a big deal in a healthy real estate market where Rockport homes for sale are bought in less than a month, but if the market is suffering in the first place, which has resulted in owners selling, this will only drive prices lower.
Be a Contrarian
With overflowing options, your property will stay on the market for longer. This defeats the purpose of selling to alleviate losses anyway, so if everyone is selling, buy. Market prices are down, which means you can gain a bit of profit for your purchases once you sell them when the market recovers. Conversely, when there is greater demand for houses, and people are looking to buy, figure out if the prices are good enough to sell your properties.
But Learn to Let Go
Gaining profit is one-half thanks to impeccable timing; the other half is all about learning to let go. When the property fetches something lesser than the amount you bought it for, you will not want to sell. You will think you can wait out the fluctuation and sell at a better time. But when prices continue to sink lower, you need to decide if you’re only increasing the risk by continuing to keep the property. If there’s no indicator that the market will recover soon, don’t let the pain of loss stop you from making a decision you should have made a long time ago.
Real estate investment is all about highs and lows. To minimize your losses, know what to do and when to do it.