It is a classic chicken/egg type of question.
Should you sell your current home before – or as soon as – you commit to building a new one? Or do you start building first and sell closer to the completion date?
It is a very good question – and one you are not alone in asking. From our experience, most clients are split about 50/50 between the two approaches. We have found that it all comes down to a buyer’s tolerance for risk and the degree of security they need to feel comfortable and at peace in their decision.
For some, the decision is fuelled by the worry they could be stuck with two properties – and two mortgages. However, with the right realtor, the right builder and the right sales strategy, you can greatly minimize the risk and reduce the worry.
Below we’ll explain all your options, including the pros and cons of each. We’ll also show the importance of pricing your home to sell and how to stage it to show well with buyers.
Build Time vs. Average Sale Time: What You Need to Know
Before you decide whether to put your house on the market sooner or later, consider these important timelines, which may impact your decision.
- Typically, a new home will take between 6 months to 9 months to build. If you would like to move in sooner, purchasing a quick-possession home is also an ideal solution.
- On average, a Calgary home is on the current market for 60 days (Source: Calgary Real Estate Board). In other words, it is expected to sell within two months.
- On average, the buyer of your home will want/expect to move in within 30 to 60 days of closing. Negotiating a longer possession date may limit your ability to sell.
A few factors can impact the selling time, including the type of home, the condition of the home and how reasonably it is priced. Condo apartments and homes valued over $1 million typically take a little longer to sell in today’s market.
So the reality is that if you are building a new home, you actually have a lot of time to sell your existing home. This is a luxury you do not have when purchasing a resale home.
1. Selling Before (or When) Your New Home Build Begins
If you want to ensure you have all your finances in order before making a new home purchase, then this option may suit you best. With the money from the sale, you will also have a clearer idea of your budget and how much to spend on your new home.
While this option may alleviate your concerns over finances, it can cause greater stress in terms of planning temporary living arrangements as you wait to move into your new home, unless you decide to purchase a quick possession home.
By selling well in advance, you may need to move into a rental home or with family/friends in the interim.
- Pros: Added assurance, security, and peace of mind. Money in hand from your home sale.
- Cons: The need to find short-term accommodation and storage while your new home is being built. The effort of “moving twice.”
2. Selling Closer to Your New Home Possession Date
The other option is to sell your home closer to the possession date. Typically, the advisable thing for someone to do is to list 3 to 4 months in advance of their new home possession. This takes the average sale time into consideration and also leaves room to negotiate a 30 to 60-day possession with the new owners so you can comfortably transition into the new home. It makes for a less stressful move.
- Pros: Eliminates the stress and effort of moving twice. Ability to stay in your home and community instead of interim arrangements. No need for additional storage.
- Cons: Shorter window to sell your current home. Fear of not selling.
Is Your Home Priced to Sell?
If your is priced right for the market, your home will sell quickly. Naturally, you want to make as much as possible so sellers often think their home is worth more than it is. If you’re priced out of the market, you will have a much harder time selling it. This is obviously a concern if you are in the process of building a new home.
This is compounded due to the current state of the economy and changes in the housing market. For instance, if you bought your current home at the peak of the market, 3 to 5 years ago, you may be selling for less than you bought the home for. So in your head, you think ‘I’m losing money.
Nonetheless, it is all relative. You may be selling for less, but you are also buying for less – and sometimes much less. Assuming your new home is larger, you’re actually coming out ahead in most cases.
Other Ways You Can Improve Your Ability to Sell
To ease the transition, We offer a free consultation program. We will recommend one of Calgary’s top listing realtors, saving you thousands of dollars. This also allows you, as the seller, to maintain greater equity in the sale price.
In addition to pricing your home to sell, it should be properly presented to sell. We always advise our clients to cut back on the clutter – including moving or minimizing furniture to make rooms look clean and spacious. Personal items, such as family photos, should be packed away. In some instances, a fresh coat of paint or minor fix-ups can make a world of difference.
Embrace the Excitement of a New Home and a New Stage in Life!
There are misconceptions about selling a home that leads people to be overly cautious when selling a new home to buying a new one.
If a property is priced right, your home will sell quickly in this market. The fear of not selling a home is exaggerated and can be an unnecessary source of worry. Your realtor and your builder are there to help you make the transition to a new home as easy and as rewarding as possible.
