Normally it can be difficult to convince owners to sell their property when they have no real underlying reason to do so, but we’re living in a very unique time right now. We not only have the coronavirus happening, but it also appears that we are now moving into an economic downturn, and asking one simple question of property owners can help you to motivate a certain percentage of them to list their property for sale right now, and put it on the market.
You see, so many owners can get lulled into a state of complacency, and lose sight of the big picture. With this in mind, there will be some owners who will right now be thinking, “We don’t want to sell right now, but we’ll probably be selling at sometime in the next 1-3 years.”
But here’s the problem with that kind of thinking: In 1-3 years, if we are in fact heading into an economic downturn right now, their property will probably be worth less, and potentially a lot less, than what it’s worth right now.
In keeping this in mind, when we arrive at the peak in real estate cycles, it will normally take ten or more years for us to return to the next peak in the cycle once again. As an example of this, here in Southern California, here are the approximate years when we’ve reached the last four peaks within our real estate market:
In my opinion, we’re now in the process of moving past the peak in our market here, and this will become clearer in the rear view mirror when we have statistics for our second, third, and fourth quarters of the year. The coronavirus certainly is jump-starting this downturn quicker than we anticipated, but in looking at the ongoing slowing of property appreciation here, combined with the fact that housing prices have become much less affordable to so many people, it was looking to me like we were getting very close to moving beyond the peak anyway.
The timing in your market for when the peaks have occurred may not follow the pattern of these exact same years, but I believe, when you do your own research, that you will find a similar pattern.
So when you’re dealing with an owner who is thinking that they may want to sell, but they’re not 100% certain of it, or you’re talking to an owner who says that they may want to sell in 1-3 years, ask them the following question:
“Are you prepared to hold onto your property, in knowing that we are likely more than 10 years away from reaching the next peak of the market once again?”
Then show them the data proving when the last 3-4 peaks within your own local market have occurred, so that they now know you are coming from total certainty around the history on this.
Because so many owners can lull themselves into total complacency in the moment, in thinking that if they wait to sell until 1-3 years down the road, it will be no big deal to them. But it will likely be a really big deal to them when they’re finally 1-3 years down the road!
Owners can oftentimes think that when times are good, that there is no danger to the value of their property dropping significantly, but this can be a false assumption, particularly in those areas that have experienced a tremendous amount of appreciation.
In addition to this, I recently asked a real estate market timing expert how long he believes it will be here in Southern California, before we hit the next bottom of the market, when it will then be the ideal time to buy once again, and his response to me was, “At least another 5-6 years.”
So when you have an owner who believes that they’ll want to sell in 1-3 years down the road, ask them, “Do you want to sell at the peak of the market right now? Or are you now prepared to wait ten or more years until we hit the peak of the market once again?”
Because there’s a really good chance that selling their property today will bring them the best price they can get for it, for many years to come.