Buying or selling a home is always a big decision. Although it’s exciting, the last thing you want to do is lose money unnecessarily. Factors that influence value include the size of the home, location, amenities as well as its liquidity. Home prices in Canada have continued to rise, however, there are the serious issues when it comes to rising debt and expensive real estate. That’s why liquidity needs to be a focus when dealing in real estate.
What does liquidity mean?
Liquidity is defined as the degree to which assets are allowed to be bought and sold and the ease of sale without affecting the value of the asset. An asset is a valuable resource that has tangible value. Based on liquidity, assets are classified as liquid or non-liquid of which cash is considered to be the most liquid asset, while real estate is relatively non-liquid because it requires more capital. It also takes longer to sell a property (depending on location) and subject to market changes.
Selling a Home
Liquidity is distinguished by a high level of trading and is often a relative measurement in real estate. If a home has high liquidity, it means that it’s in demand and easier to sell. If a home has low liquidity, then it can take longer to sell. Thus, the higher the liquidity, the easier it is to estimate the value of the home, it’s liquidity, and how much the value will appreciate.
The factors that will affect liquidity are:
- Property location
- Local market dynamics
How to make property more liquid?
To make property more liquid, especially, a non-mortgaged home, you can:
- Rent your property to someone then eventually offer to sell it to them
- Propose to carry the new mortgage loan for a buyer
- Sell it at an attractive price
To learn more, call Michaels Global Trading today at (888) 471-5066 or contact us here.