Why Is Real Estate Market Liquidity Important?
Property, like other liquid assets cannot be converted into cash easily. Liquidity of your real estate property is the measure of how easily you can sell off your property when needed and how successful you are in doing it. It determines whether your property will be sold off quickly or slowly and how much value will you get for it.
Liquid Property
Simply put, the property which is easy to sell in market is more liquid than the ones that are harder to sell. For example, in some places, properties are difficult to sell even when they are valued as low as $10,000. These properties are not liquid. If your asking price for such properties is 30,000 or 40,000, you might not get a buyer even in four or five years.
Expensive and high-end properties are usually less liquid as they have a low buyer and seller activity. On the other hand, the properties located in less expensive neighborhoods sell more quickly as they have a wider market of potential buyers. Here is how to determine the liquidity of your property.
How to Determine Liquidity of Your Property?
Here are some factors that make your property more liquid.
Location
- Low unemployment
- Low crime rate
- Close to places of transportation and employment
Market
- Sales and purchase activity of the market. More activity, better liquidity
- Affordability
- Stable prices
Others
- Timings. Buying activity is at its peak in September and March
- Low transaction expenses. Properties with high cost usually have low liquidity
- Good rental markets offering high yields
Whenever you are buying a property, it is important to make sure it has high liquidity. This will increase the return it will give you and you will also be able to sell it off in case you are in need of quick cash, which will not be the case if the property is low on liquidity.
Contact Loyal Partner Homes if you are buying homes in Prior Lake, MN to get the best and most liquid properties. We will take care of all aspects of the buying process, making it a breeze for you.