Real Estate Talk:
The best time to buy or sell
When is a good time to buy and when is a good time to sell?
By Joseph Marovitch
When is a good time to buy and when is a good time to sell in this surreal crisis we face? The great Kenny Rogers, who, unfortunately, recently passed away, had this wise advice for the best of us in his song The Gambler, “You’ve got to know when to hold ’em, Know when to fold ’em, Know when to walk away, and know when to run…” The words pretty much apply to everything in life.
Some sellers sell when necessity requires, either because of employment relocation or financial requirements. Anytime is a good time to sell, if one must, but only at fair market value or better.
If one is selling, not because of pressure to move due to circumstance but just because they would like a change and are not under pressure or a deadline, a good time is when it is a seller’s market, meaning prices are rising due to more demand then supply. This was the case before the COVID-19 crisis and it will be again once the crisis passes.
Anytime is a good time to sell, if one must, but only at fair market value or better.
Some may feel pressured to sell now because they think real estate market prices will drop due to the current situation. They may be right; however, the crisis will pass and when this occurs, I believe the market will have a tremendous bounce back. Montreal is still an island with diminishing space to build. Interest rates will likely remain low for the foreseeable future and many people who have invested funds will experience financial growth in certain sectors, i.e. toilet paper, apparently for the way people are stocking up.
When the crisis ends and the demand, which remains throughout the situation, grows and is unleashed, the market should be exciting for sellers.
For buyers who are not under pressure to purchase and do not have a deadline, the best time is when the demand is low and inventory is high. Inventory is high when interest rates are high or there is a political or environmental crisis like today. A crisis provides an opportunity to purchase unaffordable stocks like banks, insurance companies and tech stocks at a discount. A crisis also provides an opportunity to purchase property at discount prices from sellers who are under pressure to sell.
On average, assuming there is no crisis and demand is not overly high or low, anytime is a good time to buy or sell if the price is at fair market value. The fair market price depends on the location and condition of the property. Homes that are closer to the downtown core of a city, but not in downtown, tend to be more in demand and therefore have higher values, i.e. Westmount, Outremont, NDG, Montreal West or Griffintown.
‘… the crisis will pass and when this occurs, I believe the market will have a tremendous bounce back.’
Property that is further from the core of a city’s downtown tends to be less in demand and therefore has less value, i.e. St Laurent, DDO, Kirkland or Beaconsfield. One can determine the value increase by finding the average one-year return on a purchase. In other words, if you purchase a property in Westmount or Kirkland and sold that property one year later, how much is the increased value.
If in Kirkland the house rose in price by 3 to 5 percent and the value of a house in Westmount rose by 10 or 15 percent, then the property values rise quicker in Westmount than Kirkland. Both Westmount and Kirkland will rise in price but a buyer should not pay a Westmount price for a Kirkland home. The price must be fair market for the area and the condition it is in.
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Next article: How to prepare for the spring market
State of the market
As of midnight March 24, all non-essential services have been shut down. Real estate brokers have been informed by the OACIQ, the arm of government that monitors real estate brokerage in Quebec, that they may continue to work from home, provide information, listings and virtual tours, and perform all other work via technology only, not in person.
Broker’s agency offices are closed, open houses and showings are not permitted. Notaries may be working in the same fashion as brokers. Signing will take place via Authentisign, and methods such as Skype or Zoom will be used for meetings.
‘Real estate brokers have been informed by the OACIQ… that they may continue to work from home, provide information, listings and virtual tours, and perform all other work via technology only, not in person.’
There are those who must purchase during this time and this will place sellers at an advantage. However, there is a risk in allowing people to visit a property. Now is a good time to acquire a market evaluation and prepare for the market when the crisis recedes.
If you have real estate questions during this challenging time, please do not hesitate to contact me.
The COVID-19 virus is very nasty and highly contagious. For the aged or those who have auto-immune deficiencies and become seriously infected, the result is either permanent degrees of lung damage or death. For those who are infected but have mild or no symptoms, they are still carriers and can infect those around them.
Have a great day, make the best of the situation, please stay safe and take precautions.
Joseph Marovitch has worked in the service industry for over 30 years. His first career was working with families from Westmount and surrounding areas, hosting children between the ages of 6 to 16 as the owner and director of Camp Maromac, a sports and arts sleep away summer camp established in 1968. Using the same strengths caring for the families, such as reliability, integrity, honesty and a deep sense of protecting the interests of those he is responsible for, Joseph applies this to his present real estate broker career. Should you have questions please feel free to contact Joseph Marovitch at 514 825-8771, or firstname.lastname@example.org