A small percentage of very smart real estate investors have been aggressively selling off their investments in real estate and second homes in fear that a post-election economic downturn will have a severe impact on real estate prices. At first blush, it appears as if this group of very successful investors may be overreacting. Upon careful consideration, however, this strategy may make a lot more sense than you would think.

Let’s weigh the risk of selling versus the risk of holding the property and selling later, from an investment standpoint.

1. Sell Now
2. Economic conditions tank the real estate market. If this happens, the above group of investors look like real estate gurus and save hundreds of thousands of dollars by selling now before prices drop. Once prices near bottom, they repurchase for pennies on the dollar and make a killing.
3. The real estate market doesn’t tank and continues to improve. The same group of investors repurchase real estate investment properties for a slightly higher price but have been able to sleep at night knowing they have avoided catastrophic losses.
4. Hold the Property to Sell Later
5. Economic conditions tank the real estate market. The above group of investors stand by and watch the value of their real estate portfolios dwindle, then eventually decide to sell to avoid even further losses. They have now lost both money and sleep.
6. The real estate market doesn’t tank and continues to improve. Under this scenario, the above group of investors continues to do well with their real estate portfolios as prices continue to increase. They will have only lost a little sleep worrying about their investments.

An evaluation of the risk and rewards of each of the four possible scenarios proves out the logic behind “crying wolf” and selling now. After all, there’s something to be said about minimizing risk and getting a good night’s sleep!