It’s easy to talk to a consumer or an investor about this, but it’s also a key factor that real estate agents need to understand and use in their business as well.
Topic – Mindset for a changing market
Mentor – Rik Rushton
- Why buyers should not try to ‘time the market’
- Who really loses?
- Just get on with it
Property Management Matters with Kasey McDonald – How to prepare to sell a rent roll
Kevin Turner: In our consumer show, Real Estate Talk, we call off and talk to investors about time in the market or timing the market. So many people believe it’s important to time the market. Rik Rushton is our guest mentor all this week, and his website rikrushton.com . Hey Rik, relate this, and I know it’s easy to talk to a consumer or a investor about this, but it’s also a key factor that real estate agents need to understand and they can use in their business as well, isn’t it?
Rik Rushton: Oh absolutely, specifically with buyers at the moment, Kevin. If we think about it, last few years buyers have been on the back foot. They’ve been really out of the pump, they’ve had to compete, they’ve probably had to pay overage for most properties, so now they finally think “Well hang on. We’re holding all the Ace’s now at this camp, so we might just take our time with this.”, you know?
Rik Rushton: Meanwhile, wait for the next best deal, and so what we have to do as agents is educate these buyers to the recent history of real estate. You don’t have to go too far back to show people buying homes in a certain year and doubling the asset value within seven years. So what we gotta explain to them is if they’re going to be half smart and try in time their move into the market, they could miss out on one of the best properties that they’ll ever get because they’ve tried to play the negotiation game and lost.
Rik Rushton: And if you lose a listing that’s really well priced in this market, we know that the market will come back again, it always does. And so you want to be at the front of that sort of turn and that shift if you can by being into the market sooner rather than later.
Rik Rushton: I suggest to every buyer that the sooner they’re in, the sooner that they can get the equity gain, the quicker they can actually enjoy the equity gain of being a home owner, and not paying off someone else’s mortgage. Either as a tenant and not staying at home with mom and dad, so it’s really about educating buyers around that.
Rik Rushton: And of course, we’ve gotta do that with sellers as well, but for this point its really important to make the absolute statement to the buyers that the sooner they’re in, the sooner they gain. The longer they wait, the longer the chances are that they’ll miss the boat. And that’s probably something they don’t feel at the moment because the market is shifting, but we need to create that sort of competitiveness, that scarcity if you will, because if we don’t do it certainly the press isn’t going to do it for us that’s for sure.
Kevin Turner: Now, that is for user, because even the press do not understand that. I defy anyone to challenge me on the fact that if you are timing the market, you are going to miss it every single time, because by the time you find that it’s either peaked or it’s on it’s way back, it’s too late.
Rik Rushton: Absolutely because we get a load ladder, as we all know. Yeah, called it before, and so we don’t know that it’s happened until it’s actually happened as you say. The boats already turned to starboard and the rudders moving it, and we find out after the flow. So, yeah absolutely spot on there, and I think the other message too Kevin, is to … sailors sometimes all say “Look, we’ll just wait. We’re not in any hurry, well hang on”, and then when your saying your not in any hurry it’s sort of a equity gain, equity loss. If you don’t move your sale today, you don’t get your repurchase again into the same market getting that sort of windfall, and then your new sort of markets.
Rik Rushton: I say, the only losers really are the state governments who don’t do as much on stamp duty, and probably potentially agents who don’t get as high a commission, so any change over costs in this market as a seller are far better than they were this time a year ago, and probably this time two or three years ago. So, yeah, there’s no point of trying to time the market, as you just said so eloquently. We know that the market shifts about three months after it happens, so the better news is to say “Why would we let the next five to ten years of our life be dictated by trying to time or guess where the markets going? Why don’t we just get on with it, get in with it, and get going with the equity gain that will happen over the next decade? Rather than the short term movement over this next sort of few months?”
Kevin Turner: Yeah, and what’s the saying? The best time to plant a tree was what? A hundred years ago? Second best time is now. Same thing with the market.
Rik Rushton: Exactly, let’s get planting, and lets get enjoying, because someone’s sitting under the shade today because they made a better decision, you know, ten years ago. Let’s get going with a better decision.
Kevin Turner: Yeah, tomorrow when Rik comes back we’ll help you with the dialogue that leads to the deal in a changing market, certainly the environment that we are in today. Our guest is Rik Rushton, website is rikrushton.com Talk to you again in the morning mate, thank you.
Rik Rushton: Thanks Kevin.