5 reasons why people sell below market value

Here are five reasons why someone would sell a property below market value:

1. They don’t care

Some people and institutions simply do not care what the market value of a property is. For example, take the case of a mortgagee-in-possession. If a lender (usually a bank or finance company) has taken possession of a property, they just want to dispose of the property as soon as possible.

The lender is predominantly concerned with recovering his or her mortgage on the property and the expense incurred in selling the property. While they have a duty to maximise the price, a public auction usually would satisfy an obligation to obtain a fair price. You will discover that mortgagee sales are a great place to get a property significantly below market value.

2. They don’t know

Some people may not do as much research on a property as they should. They may not have bothered to discover the zoning codes in the area. There may be an interstate seller who hasn’t bothered to keep up to date with market prices. There are a number of reasons why someone may not know the market value of a property.

3. They don’t want to sell at market value

This is hard to believe, but some people actually don’t want to sell at market value. Often it is a bitter dispute between partners (life partners or business partners) and the parties may turn vindictive toward each other. They would rather see the other side suffer than win themselves.

4. They believe they don’t have a choice

For some people, selling below market value happens because they don’t believe they have a choice. For instance, the bank may be threatening them with repossession. Or they may have purchased elsewhere and either don’t want to take out or cannot take out bridging finance. For whatever reason, in their minds they believe that they have little choice.

5. The emotional cost is worth more than the financial cost

For whatever reason, some people do not deal with pressure very well. In property there is often a lot of emotional pressure added to the situation. People become irrational especially if financial pressures are building up, or the property has been on the market for a long time. Suddenly the emotional price is high and they would rather slash the price than have the uncertainty of not selling their home or investment property. The emotional quotient is highest when the property is the principle place of residence.

For more information on how Michelle Farnan can help you find and evaluate a great investment property, you can contact her on 1-800-000-159 or email info@momentumwealth.com.au.

More articles here