The key to investing is learning how to maximize your profits and sell assets at the right time. This applies to all forms of investments, though it’s especially true for real estate. Selling a house or an apartment incorrectly can result in you losing thousands of dollars – sometimes even tens of thousands.
What stops you from maximizing profits in this investment domain? In short, loads of different things!
You need to learn about and discover the potential problems preventing a big profit, which lets you understand the right way to sell your asset and pick up as much money as possible. Following that line of thinking, here are the main things stopping you from pocketing the best profits:
General Market Conditions
We can talk about the rights and wrongs of real estate investment for eternity, but one of the biggest mistakes revolves around the general market conditions. The property market is usually split into two “seasons”:
- A buyer’s market: This is when there are lots of properties for sale but not much demand. It’s an ideal time for buyers because they get so many properties to choose from. It gives them buying power; sellers will struggle to negotiate because the buyer could have four or five other properties they’re looking at. This normally results in homes being sold for way under their market value.
- A seller’s market: As you can deduce, this is the opposite of a buyer’s market. It’s when there’s a huge demand for properties but not much inventory on the market. Your home could be the only one a buyer likes – though it could also generate interest from many other buyers. Seller’s markets drum up bidding wars and help you make a substantial profit.
In other words, you’re never maximizing real estate investments by selling during a buyer’s market. Keep analyzing different trends and understanding when the market switches to a seller’s dream scenario. Then you should list your property and sell it for considerably more than expected.
The Condition Of Your Property
What’s the current condition of your property? If you’ve let it become overgrown and not cared for, you will never get as much money as you could for it. Proper are less interested in rundown properties with loads of little issues here and there. They’re way more likely to spend money on nicer homes without any problems.
That’s why you need to pay close attention to your property’s condition and work on making it as nice and presentable as possible. It should look clean – and you should repair any small problems so it’s more attractive to buyers.
Alongside this, you should make calculated improvements that increase your property’s value. Think about small things, like a patio in the backyard, that add value to your home and help you sell it for more money. You’ll need to keep an eye on the expenses – or you run the risk of spending too much money on your home and not making an overall profit. Regardless, the condition of your property matters a massive deal and should be taken seriously.
Issues With Shared Ownership
You may have the perfect property. It’s been kept in excellent condition – and you invested in home improvements. You managed to boost the value by 10 or 20%, which is a remarkable feat. Unfortunately, this can all be undone if there are shared ownership issues to contend with.
What would this entail? It mainly links to properties you either bought with a partner or bought by yourself but put your partner on the deed. Married couples do this all the time, though there’s a problem when you split up. Your ex is still on the deed, so they technically share part of the home. That means you have to consult them before selling and give them what they own after receiving any money.
In most cases, it can mean you only get 50% of the home’s sale value. There is a way to fix this, though it can be complicated. You’ll have to negotiate with any ex-partners and get them to sign a quitclaim deed. In simple terms, a quitclaim deed absolves them of any ownership and transfers the full legal ownership of the house to you. This will let you sell the home and maximize profits by taking all of the money for yourself.
Pricing Your Property Too High
Ironically, overpricing your property can lead to you selling it for much less money and making a poor profit. Overpricing is a strategy some real estate investors use, though they normally discover it doesn’t work. The theory is this: if you list your home for way above your ideal price, then buyers will haggle it down cheaper. They think they’re getting a great deal by knocking money off the listed price, but you’re actually making a huge profit because you listed it for way too much anyway.
You can already identify some holes in this plan, starting with an obvious one: buyers won’t be interested in an overpriced home. That theory only works if somehow a buyer sees your property and decides they desperately want it – despite the fact it’s way more expensive than all the other similar properties in the area.
What typically happens is your home stays listed for months without any interest. Buyers then notice it’s been on the market for months and assume there’s some sort of hidden problem. Houses don’t tend to take long to sell – especially if you’re smart and selling in a seller’s market. Your property almost ends up with an invisible red flag that deters buyers. You’d need to drop the price dramatically to gain any interest, which may minimize your profits.
Any of these four problems can stop you from getting the most out of your real estate investment. With that in mind, make a concerted effort to avoid running into these roadblocks. There should be no reason you don’t make a profit from selling your property. House prices always tend to rise, so as long as you’re selling at the right time, you should be fine.