In fairness, I'm not going to offer advice, just an anecdote and an opinion.
This reminds me of a situation prior to moving to Aus when I used to frequent an expat side. People on there were all in a tiz because a GBP was buying less than $2. Obviously in short order it went down to $1.60ish. There was then a bounce to $1.80, and people started saying it would soon move back to $2. There was a poster on there who had moved to Aus and had a large amount of GBP. This poster asked what should she do? Many people said wait for $2. I said she should consider what was the likely upside and what was the likely downside. It seemed unlikely given that the Uk economy was in the toilet that there could be a lot of upside above $1.80, and obviously the downside was pretty big. Dont know what she did, but within a week the GBP was tracking back below $1.60.
In your case, what is your likely upside? If the market sputters back to life, in a few months you might get 30-50k more (beyond this auction+30k offer). Tough to see a sudden surge which might net you $100k+.
The possible downside is a prolonged weakening with this being your best offer, and obviously the next offer you get in that scenario could be lower and the longer you wait the lower it could go. Not even suggesting a crash here, just a long-drawn out decline due to a soft economy and a poor global backdrop. Obviously theres a stronger downside scenario also if there is a major event.
So if you were considering holding out, I would suggest you need to be prepared for the possibility of holding for a long time. If that is not a good option, I don't know why you would refuse this offer.
JMO.
Thanks davel - well thought out post as always.
The options we are considering are: 1) Getting a better offer from this buyer (we didn't jump at their first offer and this is already their second offer) 2) Hold for a few years if the market gets better 3) Hold for 20-30 years and give to my kids
I put trolls and time wasters on my ignore list so if I don't respond to you, you are probably on it ....
In fairness, I'm not going to offer advice, just an anecdote and an opinion.
This reminds me of a situation prior to moving to Aus when I used to frequent an expat side. People on there were all in a tiz because a GBP was buying less than $2. Obviously in short order it went down to $1.60ish. There was then a bounce to $1.80, and people started saying it would soon move back to $2. There was a poster on there who had moved to Aus and had a large amount of GBP. This poster asked what should she do? Many people said wait for $2. I said she should consider what was the likely upside and what was the likely downside. It seemed unlikely given that the Uk economy was in the toilet that there could be a lot of upside above $1.80, and obviously the downside was pretty big. Dont know what she did, but within a week the GBP was tracking back below $1.60.
In your case, what is your likely upside? If the market sputters back to life, in a few months you might get 30-50k more (beyond this auction+30k offer). Tough to see a sudden surge which might net you $100k+.
The possible downside is a prolonged weakening with this being your best offer, and obviously the next offer you get in that scenario could be lower and the longer you wait the lower it could go. Not even suggesting a crash here, just a long-drawn out decline due to a soft economy and a poor global backdrop. Obviously theres a stronger downside scenario also if there is a major event.
So if you were considering holding out, I would suggest you need to be prepared for the possibility of holding for a long time. If that is not a good option, I don't know why you would refuse this offer.
JMO.
Thanks davel - well thought out post as always.
The options we are considering are: 1) Getting a better offer from this buyer (we didn't jump at their first offer and this is already their second offer) 2) Hold for a few years if the market gets better 3) Hold for 20-30 years and give to my kids
Fair enough, if you're considering the "long hold" theres probably no stress.
Consider also though, can you afford to hold this place if you lose your job. May not be likely, but economies have ways of springing nasty surprises.
Fair enough, if you're considering the "long hold" theres probably no stress.
Consider also though, can you afford to hold this place if you lose your job. May not be likely, but economies have ways of springing nasty surprises.
I think majority of people will have problems holding on to their house long term if they lost their job and was unable to get another one.
That said, our offset account would easily be enough for 2 years of holding and if I received a redundancy package, another 1 year so minimum 3 years if I lost my job and unable to find another one. As an extra backup, we could always move in with one of our parents and rent this place out if it really got that bad and that would certainly extend our hold time even longer (though I would hate to do that!)
I put trolls and time wasters on my ignore list so if I don't respond to you, you are probably on it ....
The options we are considering are: 1) Getting a better offer from this buyer (we didn't jump at their first offer and this is already their second offer) 2) Hold for a few years if the market gets better 3) Hold for 20-30 years and give to my kids
From your intent to sell this house it’s clear that there are no emotional issues related to this house so you should base you decision on rational arguments.
First option is not a real option because you will try it regardless.
Forget about second option because it's nonsense. You cannot make decision now (decision to hold for a few years) based on knowledge you will have in few years (IF market gets better). You might want to say: wait for a few years and see whether market will turn better. That is completely different and I wouldn’t suggest this gamble to anywhere (especially of you have big mortgage).
“Quality” of third option depends on holding costs. If you have big mortgage on that house, than spending 20 years of interest money on education or some other knowledge/skill development programs could be better for your children (even if prices do not fall). It might be even better to sell and put money into something else. For example, this crisis may bring deflation (holding cash will be the best option) and after this crisis ends in few years or a decade stock market will rally, so total return (inheritance for your children) could be much bigger with less risk - especially during first (cash) period.
As somebody suggested you should do loss risk calculations (probability of loss times expected loss size) and reward calculations (probability of gain times the expected size of it); and than decide based on your “gambling” preferences and possible future preferences of your children. e.g. not having enough money for education they might want may outweigh option of having double the money they need for that. Conservative option with no gamble and just enough money for children may be better option than gamble that might give them twice the money they need because loss might screw them for life.
So my fee advice is: do some math based on realistic predictions.
Not listening to the "free advice" and not listening to the "experts" - we are making up our own minds. It seems the free advice I am getting here is jump at the first offer you get ...
OINK OINK
Australias most powerful finance guy Australian residential property prices back to 2004 levels by 2015
Sorry but I'm not silly enough to jump at the first low ball offer ... its not how I give my family a stable financial environment to live in. If you want to sell your assets below what they are worth, please contact me
Yes Sir.... Greed sure is a funny thing. Interesting to watch how the human brain works with fear and greed come to play.
Couldn't agree more. If I listened to the fear from the bears, I would have sold for $30k less.
Edit: Come to think of it, if I had let the fear of the "40% house price crash" get to me, I wouldn't have bought this house 5 years ago and would be even worse off financially. Yes - fear holds a lot of people back from making good financial decisions.
Couldn't agree more. If I listened to the fear from the bears, I would have sold for $30k less.
Edit: Come to think of it, if I had let the fear of the "40% house price crash" get to me, I wouldn't have bought this house 5 years ago and would be even worse off financially. Yes - fear holds a lot of people back from making good financial decisions.
Edit: Come to think of it, if I had let the fear of the "40% house price crash" get to me, I wouldn't have bought this house 5 years ago and would be even worse off financially.
Sure, but does that implies that you will be better off if you keep it for next 5 years?
Quote:
Yes - fear holds a lot of people back from making good financial decisions.
greed makes even more people to make catastrophic financial decisions
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