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To Sell or not to Sell - Dilemma

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To Sell or not to Sell - Dilemma

Last updated: July 18 2012
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  • To Sell or not to Sell - Dilemma

    Guys..one of my dear friend is mulling on below thoughts and asking my advice on below points..please let me know whether it makes sense, and let me know your suggestions,

    1] He bought a 2BHK (around 900 sq ft) in PS in early 2008..which cost around 25L.
    2] He went onsite..before he got possession of the flat..his dad completed the possession formalities. After 2.5 years, He has come back to Pune.
    3] After staying in this 2BHK for 3-4 months, He is not liking - the overrall quality and finish (the sample flat seemed good), cleanliness in the complex..and few more issues surrounding the complex. And also wants a bigger one, since he will be getting married soon.
    4] He is contemplating to sell this flat, and book a new 2BHK in Baner-Balewadi area. Not getting much appreciation for existing one (5-7L) but only one question bothers him - Since he has taken a loan and paying EMI's and am not so enjoying his existing property, should he book a ready possession property in the area he likes now, which atleast keeps him happy for the amount of money he is spending and can enjoy the place?
    5] Though the prices have again shot-up and struggling to find a good 2BHK between 40-45L in Baner balewadi
  • #2

    #2

    Re : To Sell or not to Sell - Dilemma

    Originally posted by Neo007 View Post
    Guys..one of my dear friend is mulling on below thoughts and asking my advice on below points..please let me know whether it makes sense, and let me know your suggestions,

    1] He bought a 2BHK (around 900 sq ft) in PS in early 2008..which cost around 25L.
    2] He went onsite..before he got possession of the flat..his dad completed the possession formalities. After 2.5 years, He has come back to Pune.
    3] After staying in this 2BHK for 3-4 months, He is not liking - the overrall quality and finish (the sample flat seemed good), cleanliness in the complex..and few more issues surrounding the complex. And also wants a bigger one, since he will be getting married soon.
    4] He is contemplating to sell this flat, and book a new 2BHK in Baner-Balewadi area. Not getting much appreciation for existing one (5-7L) but only one question bothers him - Since he has taken a loan and paying EMI's and am not so enjoying his existing property, should he book a ready possession property in the area he likes now, which atleast keeps him happy for the amount of money he is spending and can enjoy the place?
    5] Though the prices have again shot-up and struggling to find a good 2BHK between 40-45L in Baner balewadi
    Decision 1: To sell or not to sell the current flat at current rates (20% appreciation in 2.5 years)?

    Decision 2: Where to stay?

    The two decisions should ideally be taken independently. Otherwise, we will end up letting unnecessary constraints and factors influence our decision.

    Regarding 1: If the society cleanliness and construction quality is not that great, chances are that it will rapidly become worse over time. So, over time, it will become more and more undesirable. Hence, property prices will depreciate much more rapidly compared to other societies.

    Hence, selling makes sense.

    Regarding 2: There seems to be no fire.. why not sell the flat and stay on rent, until he finds the right place??

    Comment

    • #3

      #3

      Re : To Sell or not to Sell - Dilemma

      Originally posted by asliarun View Post
      Decision 1: To sell or not to sell the current flat at current rates (20% appreciation in 2.5 years)?

      Decision 2: Where to stay?

      The two decisions should ideally be taken independently. Otherwise, we will end up letting unnecessary constraints and factors influence our decision.

      Regarding 1: If the society cleanliness and construction quality is not that great, chances are that it will rapidly become worse over time. So, over time, it will become more and more undesirable. Hence, property prices will depreciate much more rapidly compared to other societies.

      Hence, selling makes sense.

      Regarding 2: There seems to be no fire.. why not sell the flat and stay on rent, until he finds the right place??
      +1. Totally agree!!!

      Comment

      • #4

        #4

        Re : To Sell or not to Sell - Dilemma

        Do not repeat the mistake.

        Originally posted by Neo007 View Post
        Guys..one of my dear friend is mulling on below thoughts and asking my advice on below points..please let me know whether it makes sense, and let me know your suggestions,

        1] He bought a 2BHK (around 900 sq ft) in PS in early 2008..which cost around 25L.
        2] He went onsite..before he got possession of the flat..his dad completed the possession formalities. After 2.5 years, He has come back to Pune.
        3] After staying in this 2BHK for 3-4 months, He is not liking - the overrall quality and finish (the sample flat seemed good), cleanliness in the complex..and few more issues surrounding the complex. And also wants a bigger one, since he will be getting married soon.
        4] He is contemplating to sell this flat, and book a new 2BHK in Baner-Balewadi area. Not getting much appreciation for existing one (5-7L) but only one question bothers him - Since he has taken a loan and paying EMI's and am not so enjoying his existing property, should he book a ready possession property in the area he likes now, which atleast keeps him happy for the amount of money he is spending and can enjoy the place?
        5] Though the prices have again shot-up and struggling to find a good 2BHK between 40-45L in Baner balewadi


        So when are you getting married? LOL
        If I were you, I would sell the exiting place and keep money in Capitals gains account(If you really have made money on this...) and rent a good apartment for now and take a call on buying after 1-2 yrs.

        Regarding buying house just because getting married is a very bad idea.
        Several thumb rules are mentioned in this forum, follow them..

        1) Buy home when married for 5 yrs with a kid Or
        2) The home you afford is what you have managed to save for in your bank account * 2. If its onsite money, I would not add all the money and add just 25% of it. You should have 50% downpayment for what home you plan to buy next.

        Good luck.

        Comment

        • #5

          #5

          Re : To Sell or not to Sell - Dilemma

          Curious

          Since your friend bought at the peak of RE in early 2008, I am really curious to know how your friend made profit on this?
          Did you consider the interest he paid for his loan? Even if no loan, loss of interest on your 25L principal for 2.5 yrs.

          Live examples are good to analyze. I remember or old friend shirishTiwari01 bought 3BHK at Park Royal for 54L in 2008. When asked how much he made on the investment, he changed his ID and disappeared.

          One more gentleman with 16 flats was boasting of his investment returning 20% easily, but when asked to add numbers, again disappeared and must he hanging around with new ID

          So please share how your friend made 5-7L profit on his investment.

          Comment

          • #6

            #6

            Re : To Sell or not to Sell - Dilemma

            Originally posted by Neo007 View Post
            Guys..one of my dear friend is mulling on below thoughts and asking my advice on below points..please let me know whether it makes sense, and let me know your suggestions,

            1] He bought a 2BHK (around 900 sq ft) in PS in early 2008..which cost around 25L.
            2] He went onsite..before he got possession of the flat..his dad completed the possession formalities. After 2.5 years, He has come back to Pune.
            3] After staying in this 2BHK for 3-4 months, He is not liking - the overrall quality and finish (the sample flat seemed good), cleanliness in the complex..and few more issues surrounding the complex. And also wants a bigger one, since he will be getting married soon.
            4] He is contemplating to sell this flat, and book a new 2BHK in Baner-Balewadi area. Not getting much appreciation for existing one (5-7L) but only one question bothers him - Since he has taken a loan and paying EMI's and am not so enjoying his existing property, should he book a ready possession property in the area he likes now, which atleast keeps him happy for the amount of money he is spending and can enjoy the place?
            5] Though the prices have again shot-up and struggling to find a good 2BHK between 40-45L in Baner balewadi
            I will suggest to finalise a new house and sell just before that so that he can save himseld from price changes (if there is further increment in price) as well can save on capital gain tax.

            Comment

            • #7

              #7

              Re : To Sell or not to Sell - Dilemma

              Thanks Rajesh, Mahesh for your replies

              Yes, I did told him to figure out how much he is actually getting from this old flat. He took a loan at 10.25%..and has been paying a EMI of around 18K since last 2.5 years. For 1 year he gave it on rent of 8K/month.

              Have asked him to wait for sometime, and find a good deal for new house and then sell current one.

              Comment

              • #8

                #8

                Re : To Sell or not to Sell - Dilemma

                Originally posted by mahesh pune View Post
                I will suggest to finalise a new house and sell just before that so that he can save himseld from price changes (if there is further increment in price) as well can save on capital gain tax.
                House is not a commodity. It might take an entire year to sell it. Timing the 2 things in quick succession will be almost impossible.

                Comment

                • #9

                  #9

                  Re : To Sell or not to Sell - Dilemma

                  In your friends place, I would have sold the place first, sit on cash for some time, live on rental for a year then take a call. I did something like this, I had a two bedroom in NIBM road, I had picked it up in 2002, sold it in 2010. It might help to slightly undersell your property, the buyer should find it enticing enough to go for it. If you price it at the going rate of new property, why would anyone go for it when he can get a brand new unit for the same price. There are loads of properties available for sale, they are not being bought because the seller wants the price of moon for his property!! Afterall buyers are not morons, they will see the price, the VFM aspects. It also helps to keep some ready cash, you have to be on the lookout, you might get a good deal if you have cash ready.

                  Comment

                  • #10

                    #10

                    Re : To Sell or not to Sell - Dilemma

                    Please share, if you dont mind!

                    Originally posted by vijaysagart View Post
                    In your friends place, I would have sold the place first, sit on cash for some time, live on rental for a year then take a call. I did something like this, I had a two bedroom in NIBM road, I had picked it up in 2002, sold it in 2010. It might help to slightly undersell your property, the buyer should find it enticing enough to go for it. If you price it at the going rate of new property, why would anyone go for it when he can get a brand new unit for the same price. There are loads of properties available for sale, they are not being bought because the seller wants the price of moon for his property!! Afterall buyers are not morons, they will see the price, the VFM aspects. It also helps to keep some ready cash, you have to be on the lookout, you might get a good deal if you have cash ready.
                    Can you please share the high level details of your sale? Since you bought right before the RE boom and sold at the very end of it. I am curious to look at the profit one makes in this period.

                    Please share. Total initial cost, loan amount, interest rate, rental yield and final sale price.

                    I would also like to know how long did you had your home in market for sale. I am sure you must have kept it in market with high price for atleast couple of months, before reducing the price. Please share this details.

                    Thanks

                    Comment

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