Financial Exit Strategy: ” Chasing the Market Down “
A few years ago, I was talking to one of my neighbours who was retired. He had been a homebuilder (remember those Vancouver Specials ?) and he talked about the ups and downs of the Housing Market.
He talked about the Down cycle, and one year that was particularly bad. He was getting stuck with a recently completed home as the market was drying up. He told me he had to ” Chase the Market Down”. I asked him what that meant ?
In essence he explained it as the following: If he had hoped to sell the home for $ “X”, and the market had turned, the falling market may be a new price of say 90% of $ “X” .
Lets say $ “X” = $100,000.
Then $90,000 is the new market price.
” Chasing the Market Down ” may entail cutting the price to say $85,000. What you are attempting to do is attract a buyer who smells blood but is looking for bargains….you, the seller always provide a greater discount. . In this case, the buyer sees a saving of $5,000 compared to other similar products.
You, as the seller, don’t get greedy , and/or also minimize your losses. When markets hit cycles…some people cannot read the tea leaves nor see the bigger picture. They hold on too long in a BOOM or a BUST economic cycle.
Remember..it is ALWAYS the BUYER that ultimately determines the price, NOT the Seller, whether it is a BOOM or BUST.( Note: the buyer who offered the most in a bidding war is called THE GREATER FOOL)
If you can ride it out..fine.
Otherwise…., unfortunately, it can be every person for themselves.