Monthly Archives: May 2019

Tips for selling in a slow market

Yes, the property market has hit the skids. If you’re thinking about selling, perhaps you feel now is the worst time. But that’s not necessarily the case.

While the market has slowed, it is still possible to sell well and re-purchase – you just need to be savvier in how you go about it.

The current state of play

The key to selling in a slow market is understanding. The most important thing to recognise is the property market is cyclical, with clear upward and downward trends. When we hit slow/low market times (as we have now), we have to adjust our tactics according to the new environment to ensure they work for – rather than against – us.

Here are six ways to do this.

  1. Adjust your market expectation

In a slow market, the value of your house is directly aligned with what a buyer is prepared to pay, nothing more or less.

  1. Don’t buy before you sell

When real estate times are tough, don’t put extra pressure on yourself to sell your existing home quickly and cheaply simply because you’ve already bought another property and have to move. Give yourself some space!

  1. Take the time to prepare your property

As the saying goes, first impressions count. If your house looks good on the outside, people will want to come inside!

Take a critical look at your home’s façade and do what’s necessary to increase its street appeal. This means using some elbow grease to clean, clean, clean. Think windows, roof, brickwork, driveway etc.

Inside, pay close attention to the kitchen, family room, bathroom and master bedroom. These are your big selling points. Do some or all of the following:

  • Scrub bathrooms (yes, all that grouting!)
  • Clean soft furnishings (curtains, cushions, rugs etc)
  • Perform minor repairs (fill small plaster or wood cracks)
  • Paint

On that last point, a fresh coat of paint does wonder for your sale price. We can’t stress this enough! It’s a relatively cheap option but the rewards are immense. And while you’re at it, be sure to cover any ceiling watermarks.

  1. Choose the right agent

In leaner times, the right agent can mean the difference between a good sale price and a great one. A good way to secure an excellent agent is to seek recommendations from family, friends or colleagues.

When you have a list, interview them. Ask them about their:

  1. Sales approach
  2. Marketing plan (including advertising costs)
  3. Commission structure

When talking to them, ask yourself whether you feel they’re being honest and realistic. Many agents will readily agree to list your property at the value you want, rather than discussing its real market value. Then when your home hits the market, they’ll rush back to you with one excuse or another to cut the price (to the true market value) to get the sale. This causes an immense amount of stress and disappointment. It’s much better to begin the relationship with clear, achievable expectations.

  1. Set a realistic price

Spend some time researching what other homes in your area are selling for. Your agent can help here, provided they’re a good one, of course! This assists in setting the right price for yours.

The other thing to keep in mind is that buyers do their homework just like you will, so you’ll likely be presented with a price that’s reflective of the current market. Therefore, it’s best to start off on the right foot by setting your property price correctly and accepting that it is what it is.

You should also understand that during slow times, buyers up the ante when it comes to bargain hunting. They’ll expect to negotiate wayyyy below the asking price. This might not be the news you want to hear, but you need to remember that you will also be buying in this lower market, negotiating in a similar way on your new property in the near future.

We hope these few steps will help you feel confident in getting your property ready to sell in these slower times.

Should I refinance my interest only home loan?

If your interest only (IO) loan period is up, perhaps you’re wondering whether you should try to extend it, or switch to a principal and interest (P & I) loan.

It’s a tricky decision particularly when you consider the fact that banks are now tightening their lending conditions, especially for investors. This crackdown is making it infinitely harder to extend an IO period, or refinance.

IO loans

With an IO loan, your repayments only cover the interest on what you’ve borrowed. It does not reduce the principal amount. When the interest only period ends, you’re faced with two choices:

  1. Try to extend the IO period or,
  2. Completely refinance to a P & I loan

In the current climate, either of these options is tricky.

Which option should I take?

If the home you purchased is your permanent residence, then trying to extend your IO period may not be in your best interests. IO loans provide short-term benefits – such as smaller repayments – but could end up costing you more interest in the long run.

But if your home is an investment property, an IO loan may work out to be the better choice, particularly when you consider the interest is usually tax deductible.

Note: you should discuss this scenario with your tax advisor/accountant. And don’t forget  the principal needs to repaid at some point too.

Further help

Securing an IO extension or switching over to a P & I loan can be complex. It’s vital to understand the nuances between the banks to ensure you’re getting the best deal, not the bank.

If you have an IO loan and are thinking of refinancing or extending your IO period, please get in touch. With many years of mortgage brokerage experience behind us, we’d love to help demystify the process.