A conversation with “you” — about the toughest issues in buying or selling property

Me:     Say you and I were sitting down over a cup of coffee and just talking about your situation… in other words, what you’re doing as far as buying or selling goes… What would be your first question?

You:    Actually, to be quite honest, Dirk, we’re not 100% certain that making a move is the best thing for us to do right now—whether it would actually work out favourably for us or not. We don’t really have to move, but it seems like a good idea—although I can’t say we’re absolutely convinced. There are quite a few things to consider, some in favour and some against. That’s one thing we’re struggling with. So what would you suggest we do about that?

Me:     So, to move… or not to move? That seems to be your question. Yes, this is certainly the first issue—and perhaps the most critical one everybody faces. So how can you come to a better understanding about whether or not you should buy/sell/move? The secret here is simply to give yourself an opportunity to think more carefully about why you should, or why you should not, make a move—without having any of the other thoughts or details running around in your head. Invest some time in doing a careful analysis of the pros and cons, the advantages and disadvantages.

It’s time to be really honest with yourself and dig deep into the back of your mind to find out how you really feel about things. You’ll need to make some quiet space for yourself, where you’re able to think without interruption. Take a pen and paper, or our Pros & Cons Worksheet, and actually write down what you would gain, and what you would give up by moving.

Let it all out! This is not the time to hold back. And get it all down on paper. Have more than one session of this, allowing a day or two between them. Each time you come back to it you’ll have thought of something else to add—or subtract! Eventually you’ll see a clear picture emerge of what the best way forward is.

You and your partner could do this together, but it’s actually best if you do it separately and then compare notes. Once you’ve completed your pros and cons, you’ll be in a much better position to see which option is the strongest. Then you can make a comfortable “policy decision” that lets you feel the direction you’ve chosen has been well thought out. Unless you run into any unforeseen obstructions—it’s full steam ahead! All nagging doubts out of the way!

You:      Sounds good. But there’s another thing… the Market: we’re not quite sure where the property market is at the moment and what would be a reasonable price to expect for our place. Or what the value of properties are where we’re thinking of buying. And it’s hard to really make sense, as far as prices and value for money go, of what we see on the Internet and in the papers. Can you give us some advice?

Me:      You’re right. Most people struggle with understanding the property market and the price of houses. The way to overcome this is to get really serious about your research. You’ll need to make a methodical study of what properties have been selling for around you, and also in the area you’re thinking of buying.

There are two things that’ll make a difference. Firstly, you need better information than just going to auctions, looking on the Internet or in the papers. The best thing to do is look up the latest sales results on the Real Estate Institute of Victoria’s website on a regular basis. These results are updated weekly, so you can see the latest sale prices every Monday. Secondly, you’ll also benefit greatly by writing down on a sheet of paper, or our Sales Data Worksheet, the relevant facts and figures you come across in your research.

You can seldom get an accurate understanding of market values from just a few sales results. You need to ideally collect sale prices over a number of months so that you have more reference points to compare and analyse. Doing your research this way works better and just makes you more confident and more relaxed.

You:      Okay. The next thing, Dirk, is… our Budget. While we’ve got a rough idea about what we think we can spend on our next home, we’re not sure what all the costs are and how much we can safely afford to spend. We’re just a little bit in the dark about what exactly our financial position is and where we should set our limits. What steps could we follow to sort that out?

Me:       We can certainly give you some clues about that, and it’s something you really do need to know. How complete your understanding is of where exactly you stand financially, has significant implications. It will affect the areas you can sensibly look at for making your next purchase—and also the size and features of a suitable house. It’s very difficult to work out what your ideal next house would be unless you have a specific price or price range you can comfortably work with.

The best way to get a clear understanding of your financial position is to write down on paper, or on our Purchase Budget Worksheet, all the figures you need to look at. Talk with your financial advisor, accountant, banker, etc., and do all the necessary sums. Having these details in writing makes them more “real” to you. It’s then also easier to discuss options with your partner and advisors. When you’ve done your budget homework carefully, you’ll have eliminated a lot of doubt and uncertainty, and have removed a major restriction that often prevents you going forward freely.

You:       We’ll do that, Dirk, but there’s another thing… our Ideal House.  We’ve had a bit of a look to see what properties are out there, but nothing really seems to have very strong appeal for us. You know, it didn’t take long for the excitement of looking for a new home to wear off. In fact it’s become rather annoying and frustrating. Not to mention being time consuming! We haven’t seen anything that really grabs us, so we just keep looking and hoping that the right thing will come along. It’s just taking so much time and effort—and we feel like we’re going around in circles!

Me:      I know what you mean! What actually causes this is the absence of a really clear and defined description of what you need in your next home. Taking the view, “We’ll know it when we see it,” without having your requirements clearly defined, often leads to inspecting properties that aren’t suitable. They may look very appealing in the photos and this makes you want to go and see them. But when you do, you discover they don’t actually have a lot of the things you really require!

It’s much better to invest a bit of time in sitting down and putting on paper, or on our Ideal Home Worksheet, a list of the things you really need in your next home. Work on it over a period of a few days. Put it aside and then come back to it. Write down the things you’d like to have, and then mark which of them you’d consider “non-negotiable.” The best thing to do is for you and your partner to each do a separate list, then to sit down and compare notes. Make a special time, over a coffee or a meal, where this is the chief topic for discussion.

When you’ve done this you won’t be inclined to go and look at properties that don’t really qualify for serious consideration. Don’t even look at houses that don’t meet your “non-negotiable” requirements. This way you’ll look at fewer and more quickly recognize the one that’s right for you.

You:      That makes me think of something else… the Synergy (or lack of it at this stage!) My partner and I have our own points of view about all these things, of course, and I’m not sure how we’re going to come to agreement on what to do. How do you deal with this as well?

Me:       Being in agreement with your partner about things is an essential part of making the whole process successful. It’s so easy to make assumptions about what the other wants—and then find out later that you were mistaken! The safest way to go about it is for each of you, each step along the way, to put down on paper your own thoughts about every issue. Then you can sit down and compare notes, discuss things—and come to a clear understanding of each other’s thinking. When everything is on the table it’s much easier to come to a common understanding and agreement about what to do.

Each of you should start with the pros and cons, doing them separately, discussing them, and coming to a policy decision about moving or staying. The next step is to make sure that you both have a good understanding of market values by sharing the research information you collect with each other, so that you’ll be thinking along the same lines about price, when you come to make a buying or selling decision. Then as you work through your financial figures and get a budget worked out, you again need to share these details and discuss with each other any professional advice you’ve been given. Working out what you need in your next home is another opportunity to separately write down your own thoughts and then compare notes again so that you can form a common set of specifications of what you’re going to look for.

You:      We’ll think about all that, Dirk. But if we have any other questions, where do we go from here?

Me:        Okay. Well we’ve discovered over the years that the best way to tackle these issues, is one by one, in this order… 1) Pros and cons, 2) Study of market prices, 3) Budget, 4) Ideal house checklist. And very important: share the details and discuss everything with your partner every step along the way.

While you’re going through these steps you’ll need somewhere to write everything down. The free worksheets you can download from our website are very handy and have been specifically designed for this.

Start with the pros and cons, and at the same time build your understanding of market prices. Avoid doing anything else until you’ve made that definite decision about moving, and you’re beginning to gain confidence about market values from your sales research. Then the next issue to tackle is your budget. When that’s done, move on to your ideal home requirements. And again, keep your partner closely involved all the way.

If this sounds like the journey you’re on and you can now see how to make it easier to deal with the challenge of buying or selling, we’d be delighted to hear about it. And if you’d like someone to talk to a bit further about your situation—just give us a call on 03 9499 4500. We have a team here ready to help.

 

Dirk Jackson

Co-Founder & Partner

Whale & Co