Use Simple Maths to Help Choose the Best Rural Property
Does this sound familiar? You’ve been keeping an eye on the property market and decide that now is the time to buy. You’ve got a fair idea of what you want, so begin enquiring and doing some inspections. But nothing seems quite right. You’ve seen some good properties and one or two are “almost” what you are after. Yet you’re not sure. Maybe an even better property will come on the market next week? Time goes on and you realise you’ve missed at least one property that would have suited.
In effect, you’ve become hamstrung by trying to choose from a list of imperfect options.
The crux of this scenario is working out when to commit. In mathematics it’s called the “optimal stopping” problem and thankfully the boffins have a solution. The answer is 37%.
In basic terms, if you had 100 options you should regard the first 37 as “research”. From the 37, fine tune your criteria. Become confident in identifying your most important requirements. This is your benchmark. The time to commit is when the next option beats your benchmark.
When looking at rural properties, however, there isn’t a finite number of options. Properties come on the market and disappear again at unpredictable intervals. In this case, you should apply the principle to time rather than number of properties.
For example, you decide that you would like to buy the property before the next winter crop sowing window. Let’s say that gives you 4 months. In this case, you spend the first 37% of the 4 months, approximately 45 days, looking at options and streamlining your criteria. After 45 days, you decide to purchase the next property that exceeds your benchmark.
Of course, the optimal stopping solution relies on some assumptions, mainly that of randomness. Real life is rarely as neat as the theory. When making important decisions however; the 37% rule can help you focus your thoughts, manage your expectations and give you confidence to commit.
by Michael Guest in Latest News
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