Most property owners consider selling their property to cash in on the lucrative property prices in the market and earn considerable profit. On the other hand, there are many who plan to sell their property for reasons such as relocation to a new city or other personal reasons. Selling a property requires thoughtful planning in the same way as a property purchase.
Typically, demand and supply factors must be considered when going for property deals. In India, the home buying and selling process can be seen throughout the year. Understanding the market dynamics is important to help you get the best deal if you want to sell your property.
Selling property around festivals
India is known for its rich customs and traditions. Many festivals, such as Akshaya Tritiya, Gudi Padwa, Navaratri, Dussehra, Dhanteras and Diwali, are considered the most auspicious time to purchase property. People relate these festivals with wealth and new beginnings. Several builders announce new projects and come up with exclusive offers and discounts to attract potential buyers. Besides, banks and financial institutions offer lower interest rates on home loans.
Generally, a spike is seen in real estate transactions during festival time owing to these factors. More serious buyers look to buy around festivals, and a seller can capitalise on this situation. One can consult a local broker and list their property to find suitable buyers.
Downside of selling around festivals
One of the major challenges a seller might face when selling a property during festivals is the stiff competition from other sellers and developers. You may have to compete with competitors offering benefits and freebies, including cash discounts, car parking, appliances, gift vouchers, free club membership, etc.
Tips to sell your property during festivals
Lowering property prices is one approach to attract buyers and close deals during festival time. Put more effort towards advertising your property. Seek help from a local broker to find buyers, boost online property listing and fix a realistic price for your property. More importantly, staying flexible when negotiating with buyers can help you successfully close deals. It is necessary to weigh the pros and cons before deciding whether to sell your property during the festive season.
Selling during different seasons of the year
Winter
In India, winter coincides with several festivals such as Navaratri, Dussehra, Diwali and Christmas. Big-ticket property purchases are seen around time, which can help you find suitable buyers. In comparison to new-age home buyers, sellers may find traditional buyers who believe in the auspiciousness of property buying during festivals.
Spring or tax season
The end of winter signals the start of spring – the months of February and March. In India, this time coincides with the tax season, where many people look to save tax by investing in properties before end of March 31. Besides, this is the time when salaried employees look forward to getting increment. The increase in disposable income can drive them to look for investments. So, this is another phase when the number of property buyers rise, benefitting potential sellers.
Summer
The summer months in India, from April to June, also witness some important festivals. Many people, especially end-users, wait to invest in property during this season. Moreover, summer vacations begin in most schools around this time, providing families a perfect time to check out properties.
Monsoon
The months from July to September mark the arrival of monsoon season in India. The weather conditions, waterlogged roads and traffic jams during the rainy season could pose challenges for site visits by potential buyers. Further, many property owners deal with seepages and leakages in their property. Thus, this could be a more suitable time to undertake any repairs or renovation in the property rather than selling.
In addition, the July to September months is the time of Shradh and Aadi (observed in south India), which is considered inauspicious for property purchases.
Marriage season
The wedding season is the time when businesses such as furniture, garments, household appliances, etc. pick up. There are several buyers looking for property purchases during this time. Thus, sellers can benefit by trying to sell their property around this time.
Selling when the market goes up
The current market conditions can be a vital factor in influencing decisions around property sales and purchases. You can conduct research or check with your neighbours and friends in your area to understand if property prices are going upwards. This can be a good time to sell your property for a sound return on investment (ROI). You may have to do the math to figure out your costs, including taxes. Selling your property will help you generate capital for investing in another property.
Other factors to decide the best time to sell a property
Ultimately, the right time to sell a property is when you need to sell it. Here are some common reasons for selling a property:
- Relocation: If you are moving to another city to take up a new job, you may need to consider selling your property if you think you cannot manage it or cannot find tenants.
- Downsizing: If you want to downsize and buy a budget-friendly home instead of a spacious and costlier home, it could be the time to consider selling your property. This could be especially true in the case of senior citizens who have children settled abroad or in other cities, for example.
- Low interest rates: Low interest rates by lenders can drive the demand for real estate investments. This can help potential sellers find more buyers for their property.
The decision to sell a house must be based on careful planning. If you have been looking to sell your property, read this article on how to sell a property quickly, where we share some useful tips.
How to handle distress selling of a property?
Distress selling of a property refers to a scenario where property owners try to sell their property quickly to raise funds. These scenarios can include the need to repay debt, medical emergencies, etc. Distress selling often leads to financial loses for sellers as they are forced to accept a price lower than the market price.
However, even during distress selling, property owners can make some well-thought-out decisions and make the most of their distressed property.
- Engage a local broker who can help you assess the market situation and support you in marketing your property effectively.
- Double down on advertising. You can opt for paid packages of online property listing platforms, which helps increase the chances of finding suitable buyers for your property. At the same time, you can consider the traditional methods of newspaper listings, public forums, etc.
- Avoid disclosing the reason for selling your property or the time by which you want to sell it. Otherwise, it puts the buyer in control during negotiations. One should remember that strategic discussions and negotiations are crucial to getting the best property deal.
Calculate ROI on your property
When investing in a property, one of the foremost things to consider is the returns it will fetch. As a seller, you would want to know how much money you would gain through the sale of your property. Before selling the property, it is important to consider the returns on investment (ROI) to ensure maximum gains. Moreover, this will help you determine the best time to sell your property and compare the price offers made by different buyers.
So, what is return on investment or ROI? It is a financial metric that indicates the percentage of gains from an investment after considering the costs involved.
A host of factors influence the ROI and with a sound understanding of depreciations or appreciations, one can maximise the ROI.
How to calculate ROI?
There are various costs involved when you invest in a property, which must be considered when calculating the returns on investment:
Acquisition costs
- Property price, which is paid to the seller during purchase
- Stamp duty and registration charges, which is paid to the state government
- Brokerage charges or commission paid to the real estate agent for availing their services
- Amount spent on the total interest component over the value of home loan
Operational costs
- Maintenance charges paid to the housing society
- Property taxes paid annually to the municipal authority
- Repair and renovation costs incurred during the time you own the property
Selling costs
- Brokerage charges incurred for availing the services of the agent to help you sell the property
- Advertisement costs, which include the charges incurred to list your property online or print ads in newspapers
ROI is calculated as: (Current value of investment – cost of investment / cost of investment) X 100
Example: Suppose you purchased a property five years ago for Rs 30 lakh and have now decided to sell it for Rs 45 lakh.
You incurred costs such as:
- Maintenance: Rs 2,000 per month or Rs 1.2 lakh annually
- Renovation: Rs 2,00,000
- Brokerage charges at the time of purchase: Rs 60,000 (e.g. 2% of the property cost)
- Brokerage charges at the time of selling: Rs 67,500 (e.g. 1.5% of the property cost)
Cost of investment = Rs 30,00,000 + Rs 1,20,000 + Rs 2,00,000 + Rs 60,000 + Rs 67,500 = 34,47,500
ROI = (45,00,000 – 34,47,500/ 34,47,500) X 100 = 30%
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Whether you have decided to sell your property now or later, it is essential to do research and thoughtful planning to ensure you get the best deal. Property owners must keep in mind that property buyer activity across seasons is influenced by market conditions, among other factors. You can consult a local broker operating in your area, who is equipped with the right knowledge and guide you through the process. Moreover, listing your property in an online portal can greatly benefit and attract the right buyers.
FAQs
Is the festive season a good time to sell a property?
In India, the festive season is considered an auspicious time for property purchases. So, there are a lot of buyers looking for properties.
When is the best time to sell a home?
Typically, the best time to sell a property is when the market goes up. Lower interest rates offered by financial institutions or when there is an increase in demand due to the festive season, the number of property buyers increases due to these factors.
Can a seller back out of a home sale before closing?
A seller can back out of an accepted offer or before closing if no specific clauses in the agreement state otherwise.
What are the hardest months to sell a house?
In India, the monsoon season from July to September poses challenges for buyers and sellers.
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