“Everybody talks as if they know what’s going to happen, and nobody knows what’s going to happen.”
– Charlie Munger, vice-chairman of Berkshire Hathaway
If you want to sell your San Francisco home during coronavirus (or anytime), it is very tempting to try and time the market.
Will it be better to sell right away while there is little inventory, or should you wait for things to settle down? Will prices fall over the coming months or rebound quickly once shelter in place is lifted? What will happen to the economy? Will there be a second wave and more shelter-in-place next winter?
It will be even more tempting to ask agents to predict the future for you.
What happened in past downturns and recoveries may or may not apply to today’s circumstances. Markets are affected by many myriad factors—local, national and international, environmental, political and social—all interconnected in complicated ways.
Dubious Divinations: Reading the Real Estate Tea Leaves
Is it a crazy notion that many, if not most, predictions are made by those who have a vested interest in convincing people that they are right?
When you discuss the sale of your home with a potential listing agent, it is a job interview for the agent. The stakes are high. The agent’s ability to earn a living is on the line.
They have a vested interest in how they answer your questions about price and timing. In fact, the more confident someone is in their prediction, the more likely they are to have a bias towards their own vested interest. This will sound contrary to our public image, but nonetheless: Be wary of the overly confident or enthusiastic real estate agent.
It is one thing to know how to set the preconditions for the best possible results. Right now, more than ever, this requires a nimble brain, astute negotiation skills, and creative solutions.
It is quite another thing to say with confidence what will happen in the future. This is actually kind of embarrassing. You would think an agent should know what your home will sell for and the absolute best time to put it on the market?!
The Right Real Estate Decisions (For You)
My sense is that there are plenty of qualified buyers out there and that getting your home to market sooner than later is prudent. BUT, I do not know for sure. I could be wrong.
Here is the bad news. No one really knows the answer to these questions. No one. No one has been here before. We are in unmapped territory.
Okay, so if you aren’t going to try and predict the future, what should you do?
Focus on your own individual situation. What is your reason for selling now? Is it the right time in your life to make a move? What is the big picture for you? Will you be buying a home as well? What’s the bigger risk or gamble for you: selling now for the best possible price, or waiting to see what will happen?
Generally speaking, the most reliable way to do well with your home as a real estate investment is to buy it for the longer game (5+ years). Ideally, you buy the nicest home in the best possible location that you can afford and won’t outgrow too quickly, while keeping an adequate amount of financial reserve for emergencies.
It does happen that sometimes short-term investing can work out really well. On the flipside, even long-term homeowners can sometimes be negatively affected by a sudden turn in the market or by their own circumstances.
We are in uncharted waters. There is always opportunity and always a big picture. Let’s collaborate together on the best plan for you.
Reporting from the home office,