The topic of real estate prices in the Greater Vancouver Area is one of the most debated topics in BC. Are we in an overpriced market? Is this rapid price increase sustainable? Will government enact policy change to “cool down” the housing-market? There are many good reasons to support both sides of these arguments. We cannot give you answers to these questions with any certainty and we would further suggest that nobody can, however….
We do feel we have some unique insight on how our clients have sold their homes and been successful in the process. Our definition of success is that after the transaction is complete, does the seller feel both financially and emotionally better-off. The emotional aspect is a critical component as it’s difficult to predict the true financial benefits until after they materialize.
From our experience the secret lies in one very simple statement… It’s all about where you are going! Those who are selling due to high prices and have not thought about “what’s next” are rarely successful. Those who are excited about where they are going inevitably have a much better experience.
Trying to get away from something
In this example a couple who have been retired for five years have been approached to sell their house at what they consider to be a ridiculously high price. They feel like they can’t pass on this opportunity and can rent for a period of time until they find a townhome or condo to buy. This seems to fit with their long-term plans only this recent surge in house prices has accelerated the process by about ten years. Once they sold their house and moved into a condo, they realized they were very constrained with the lack of space and storage as well as not having enough room to pursue their hobbies. They turn their attention to finding a new house to buy and are frustrated that they cannot find many options that suit their criteria and are being outbid by multiple offers. In the meantime, the capital from the sale of their home is in the bank earning effectively zero on deposit and they feel they cannot spend this capital until their housing situation is resolved.
Going towards something exciting
A second example is a couple that just entered retirement and have always wanted to retire on the Sunshine Coast to enjoy a different pace of life close to the water. Before they list their North Vancouver home, the perfect waterfront property is listed for sale on the Sunshine Coast. Although they pay a slight premium to acquire their retirement dream home earlier than planned, they list their North Vancouver property and receive above list price on the sale. They now have the retirement home they desired and have extra capital to deliver increased income for lifestyle and travel. Success!
Often the best thing to do is nothing
Sometimes the best thing to do is nothing. A couple who have been retired for about ten years receive an unsolicited offer to sell their home at a 30% premium to current comparable valuations. This couple takes the time to answer two critical questions… Where will we go? How would our life change if we had an extra two million dollars of capital? They investigated different options to downsize but could not find anything that they are excited about pursuing. They also realize that having extra capital in their investment portfolios does not mean they will spend much more money as they are very satisfied with their current lifestyle. They choose to stay in their home. Success!
We are seeing more people sell their homes this year than ever before. Families with young children are moving to their dream homes in places like Kelowna and Nanaimo. Pre-retired and retired people are moving closer to their children and grandchildren and downsizing has become a growing trend.
Before you make any decisions regarding your principal residence, make certain you have thought about many of the emotional aspects of this decision as well as the financial benefits. If we can assist you, your family or your friends in any way, please let us know.