Doom and Gloom for Private House Sales

Private house sales and for sale by owner ( FSBO) real estate property sale can be performed with no agent or no commission through the private real estate sale website Privatepoint.

Many property owner and for sale by owner sellers view downturns in the real estate market as a huge crisis. If you are a property owner upgrading your property (so you are selling a property and then purchasing another property) you will actually benefit from a reduction in property prices in real estate across Australia.

How is this possible? Lets look at an example.

If five years ago a property owner purchased a property for $400,000 and at the peak of the real estate boom the price of the property had increased by 20% to $480,000. At the same time a property priced at $800,000 would have increased to a price of $960,000 at the peak of the property and real estate boom.

Lets assume the property owner upgraded their property at the peak of the real estate boom, so the property owner sold the property and purchased the bigger property.

Proceeds $480,000 – Cost $960,000 = Net amount to borrow $480,000

Lets assume i didn’t sell my property at the peak of the real estate boom and sold it yesterday and purchased the bigger property at the same time.

Proceeds $400,000 – Cost $800,000 = Net amount to borrow $400,000

Hang on what is going on here? The property owner needs to borrow $80,000 less if they sell their property now and purchase another property rather then do this in the real estate boom. There is a false misrepresentation within the real estate industry that a reduction in real estate and property prices are negative.

A reduction in real estate and property prices is negative if you are a private seller downgrading your property or an investor selling a property. But if you are an investor purchasing a property or a private seller upgrading your property a reduction in real estate and property prices can work in your favour.