I get asked this question a lot by friends, clients, acquaintances – “When is the best time to sell my property?” – and the answer is: there really isn’t a one-size-fits-all answer to this question. Without leaving you all high and dry though, let’s quickly cover what we generally know and how we can apply it in a case-specific fashion.
A simple pattern we tend to observe is that single-family residential real estate slows down around Christmas and picks up when it starts warming up, slows back down mid-to-late-summer, then picks up again in the Fall. Therefore, the majority of homeowners are aware that listing your house in December is generally not the best time to maximize value. Every sale is unique though and depending on what was purchased, a December sale could make complete sense. In general, however, listing your home during the holiday season is normally accepted as an unideal time due to the reduced buyer pool.
On a similar note, listing a property with a pool in the winter diminishes the added value of the pool since the pool/yard can’t be fully appreciated or properly evaluated for condition. If your backyard is the true feature of the overall property, then it always makes sense to wait until the Spring/Summer to list when possible.
When timing the exact list date of a family home with a pool, it’s very important to take these additional tips into further consideration:
(1) Try to avoid listing shortly before a long weekend (the summer has lots of them) – your first open house is your most important one and attendance is likely to be minimal on a long weekend
(2) Set a list date that allows your desired closing period to accommodate an end of August close if possible – most buyers will be families with kids who want to be moved in before the school year begins
On the other hand, sometimes the answer is counter-intuitive and the best time to sell can actually be when your house is worth the least! Consider a scenario where you notice housing prices are down 5% from a few months ago and you are considering holding off on selling until the Fall or following Spring to get more money for your home. An often overlooked question you should be asking yourself is, “Am I upsizing or am I downsizing?” The majority of buyers out there are upsizing, at least in terms of budget, if not size as well. If you’re looking to sell a 500k home and purchase an 800k home and the market is down on average 5% at the moment, even though you’ll get 25k less on the sell, you’ll save 40k on the buy. You actually came out 15k ahead by selling when your house was worth less. Therefore, when upsizing or increasing budget significantly, you can find yourself very happy selling in a depressed real estate market.
Other times, we must look to our economy and our Government for hints. If it’s Spring and the market seems slower than usual and you’re on the fence about whether to list now or wait until the Fall, take a look at what’s going on in our economy, namely with respect to fiscal policy. If it has been announced that interest rates are anticipated to decrease by the end of the summer, it may very well make sense to wait until the Fall to list. Lower interest rates increase the affordability of buyers, thereby promoting increased spending. You want to sell when demand is at it’s highest and analyzing upcoming fiscal policy is a great way to compliment other real estate decision-making mechanisms.
What if my house has a legal accessory apartment in the basement, but no pool, does this change anything with respect to timing? Even though the reality is that investors are always looking and I truly am a believer that no matter what the property or the circumstances, the right house at the right price for the current market will always have a buyer. It’s still important to remember that there are certain rules of thumb to follow with investment properties too. The majority of leases coincide with our largest pool of renters – students. Therefore, you’ll notice May 1 – April 31 leases are the standard term within Guelph, which is known for its high student population as a percentage of the full-time resident population.
Likewise, you’ll find that leases running from September 1st – August 31st are also very popular for similar reasons. So, with this ammunition in hand, when would be the best time to sell an investment property? If most leases begin on May 1st, this means that most students start looking around March to secure a lease for May. Understanding that most deals take 1-3 months to sell and close, the height of investment season runs from January to the beginning of March. This allows time to get the property listed, raise interest, and sold with a closing date that’s well before May 1st. The new owner/landlord will need time to get the unit fixed up and marketed for lease in advance of this date. If it’s already March 1st and you’re not sure if it’s too late to list, don’t forget that investment properties generally aren’t the owner’s primary residence, so if your property is pretty turnkey and you are able to accommodate a quick close, many investors are locked and loaded, ready to close in 3-4 weeks from the time an offer is accepted.
Lastly, another common situation you may come across is that you’ve been toying with the idea of selling soon and you wake up on Monday morning to find your neighbour’s place is up for sale. It’s a very similar home and you don’t want to directly compete with them, but you also don’t want to potentially lose that one special buyer that might have paid top dollar for your house instead of theirs! What do you do? This is actually a fairly tricky situation and is an example of where a realtor can assess all factors in properly addressing the situation. Factors such as the current state of the Guelph market overall, the current demand in this size/price category within Guelph, how your property compares to the competition in terms of finishes/condition/layout – all of these items and many more need to be acknowledged and evaluated. There are several schools of thought and every situation is unique, however, here are some approaches to consider (assuming you believe your property is of a similar standard to your neighbour’s):
(1) If demand is high and you think your neighbour’s property is overpriced, then get on the market as soon as possible at a better price and shift the focus to your well-priced alternative
(2) If demand is low and you think your neighbour’s property is overpriced, then it’s not as much of a rush and you may even want to see where your neighbour’s property ends up before you put all of the effort into listing yours, especially if you require a reasonably high selling price to afford what you want to buy next.
(3) If demand is high and you think your neighbour’s property is underpriced, then again, RUSH and get that thing listed. Yes, some would say who cares, if demand is high there’ll still be tons of buyers out there. Let this one sell, keep demand for the street high by keeping listings on the street at any given point lower, see where their sale ends up, then price yours accordingly. Although I don’t mind this approach, at the end of the day, you want the most money for your property, right. High demand and properties being purposely listed below market value create bidding wars. In competitive scenarios, the party who wants that property the most will surely pay the most for it. Why let your neighbour potentially scoop up the best buyer out there for your street when the times are good? Jump in on the competition and let the buyers decide which house they want to fight over (especially if you think yours is the better of the two).
(4) If demand is low and you think your neighbour’s property is underpriced, I’d also suggest getting on the market as soon as possible. Even though the rush isn’t as intense, if the buyer pool is so small for your category of property and when times are slow, that one buyer that scoops up your neighbours property could be the only realistic buyer on your street for months until things pick back up.
Although every scenario is different, it’s often the right decision to get your house on the market as soon as possible in the face of competition (assuming you feel your property can compete!). Even if their property sells right away, list it as soon as you can, as you will want to capitalize on any of the residual interest their listing left behind in terms of buyers who were a tad late to the party. Furthermore, when you live on a street where properties don’t trade often and property values are starting to hit that point where a lot of people may be looking to cash out, including yourself, if you notice your neighbour’s property goes up for sale, make sure you’re the next listing! On certain streets where most homeowners have been there for 10+ years and had originally purchased for 50% or less of current market value, when one on the street sells for a relatively high price, it can start a chain reaction of people deciding to cash out. The first few sales tend to do well, but as more and more homeowners on the street follow suit, the buyer pool for that specific street and property type gets drained, the supply on the street takes a total 180 from historically low supply to a very saturated state, and even properly priced homes start sitting on the market.
Overall, real estate is a cyclical industry. There are peaks and troughs, annual commonalities, and general rules of thumb that help guide how and when to list. That being said, each property and every day within the year pose a different set of circumstances. Upcoming government policies can shift what is normally a busy period to be a slow period, and vice versa. New mortgage rules can slow certain categories of housing, while others boom – condominiums in Guelph this past year, for example. Beware of anyone who has a direct, one-size-fits-all answer as to the best time to sell any given property – they probably haven’t given it enough thought!
I hope these tips help all of you homeowners out there understand a little more about what goes into the decision-making process when listing a property, simply aside from “Do I want to move now and what am I willing to sell it for?” You only get one shot to hit the market for the first time. Talk to a realtor and make the most of it (firstname.lastname@example.org or 519-829-0426)!
Thanks for reading! Until next time…