Buy High High Sell Low Low – a taboo in the market

buy high high sell low low

We are all familiar with ‘buy low sell high’ but do you know that there is an equal number of people who is in ‘buy high sell low’ group? As all transaction involves two parties, a buyer and a seller, whenever someone buy low, someone else must have sold low. Are you one of those who is buying high and selling low?

As the number of people on each side is the same, your chances to be in the ‘buy low sell high’ group is the same as ending up in the ‘buy high sell low’ group. 50% -50%

Rather than being ignorance, let’s face it and look into the buy high sell low phenomenon.

Buying on emotion

Do you weigh the maths over your personal preference? Are you destroying your property’s value right from the start?

If you agree with me that buying a house is more of a business decision than a personal decision, the decision-making process would have to be as objective as possible and minimize any emotional involvement. This is critical at the selection phase of identifying the few suitable houses based on your financial situation.

Once you have narrowed down to 2 units that are both optimal for your financial situation, you can now allow preferences or emotion bias to kick in to make the final decision. This will ensure that you do not buy high high.

Only allow emotion to kick in when deciding between the final 2 shortlisted units

Restricting the supply

As a buyer, are you setting too many criteria that limits the supply, hence buying a house at a premium? The basic of pricing tells us that when supply is low, prices go up. This is the key reason why recent record-breaking HDB flat have only recently met their minimum occupation period – i.e. very limited supply.

In order for price to be low, supply has to be abundance. Just look at the oil prices since a year ago.

Open up your requirement when selecting your property. Must it be in only a certain district? How about the adjacent one that cost 15% cheaper? Ask yourself again on all the requirement you have set. This will ensure that you do not buy high high.

Exit plan

Do you know when is the best time to sell your property?

If you are one of those who wants to live in your current property for life, have you spend some time to think about the scenarios that would cause you to sell this property? Be it, family expansion, right sizing, upgrading or other financial woes? In the event that you have to sell urgently, this is the biggest disadvantage to any distressed seller, you will not get a good price.

The only way to vercome this is to simply have an exit plan when you buy. You will need to decide on the target price to sell which gives a certain percentage annualized return. Together with the economy condition, you will be able to estimate the best time to restructure your asset and move up your real estate portfolio growth.  By doing so, you will not sell low low.

Selling strategies

DIY or engage an agent?

If you want to take time out to experience marketing your own house, are you ready to face the life of a FSBO? This approach is usually disadvantagous to seller and you will have a higher chances of selling below your expected price.

If you want to engage an agent, do you know how to find the right one and pay him correctly to achieve the best outcome for profits? By doing so, you will not sell low low.

 

So do you think you fit in the ‘buy high high, sell low low’ category?

Let me know if you are and I will help you to get out and be in the ‘buy low sell high’ category.

 

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