My husband and I have been discussing moving, and we have a few
questions -
1. Is it better to look for a house and list our house at
the same time?
2. Or is it better to sell our house first and then
look... and hopefully we find something.
We're having the bank do a pre-approval for us which will
be good for 120 days, just in case we do find something we love love love in
the new year. And I did contact my mortgage lady who said basically what I
already knew - that selling first can possibly create a rush situation, and
selling and buying at the same time can sometimes create a less desirable
offer to the other seller when your condition is based upon the sale of your
current home.
She suggested I talk to you as well to see what you
recommend. Soooo... Any insight you have would be great!
Thank you so
much for your note and inquiry, I look forward to assisting your family in
putting together a strategy in finding a new home and selling your current
home. To start, let me say that there really is no solid answer to whether you
should sell first or buy first.
Let's start
by going over the listing process.
Getting a
home ready to list and view is a bit of a hectic matter. The days of sticking a
sign in the ground and hoping for the best are long gone. Today there are many
aspects to the listing that are of prime importance in getting a potential
buyer through the door. There are essentially three things that affect you in having a successful and less stressful selling experience.
First and
foremost is pricing your home effectively and aggressively. A detailed analysis of sales of similar homes in
your community and area is of prime importance to understand better what is
going on in your micro-market. Within Canada, Alberta, Calgary
and specific communities and jurisdictions we can see quite a variety of
activity. We can see that the Canadian market is doing well, or not doing so
well, and that trend may or may not be the same in Alberta. On the same token,
what is happening generally in Alberta may not be the norm in your own town or
city. And even more specific, what is happening within the city may be very
different from one community to the next. We have seen a huge expansion in
communities close to the city core, both in re-development and pricing. More
suburban areas may have not fared so well over the past few months. We need to
take the "micro-market" very seriously in determining
how quickly homes are selling, and whether prices are trending upward or
downward. And most importantly, what trends to expect in the short term.
The second
aspect to take into account is how the house and property presents itself to
the potential buyer. Without a
doubt, Calgary has seen excellent sales over the past year. Something we need
to take into account, though, is how the buyer is looking at their
investment. In the past seven years or so, we have seen great volatility in
the market. Buyers often looked at potential growth of their real estate
investment in the short and mid-term. Will the market show significant growth
over the next few months and years so that I make a decent profit on my
investment? I do believe we are seeing a shift in paradigm and buyers are
starting to look at their investment once again in the long term. Can I see
myself living in this home for many years, or over a decade? This paradigm shift
really is moving back to the way we looked at our real estate purchase prior to
our unsustainable growth in 2006 and early 2007, but that's a topic for another
day!
Having said
that, it would also be prudent to point out how important it is to present a
property in the best light possible. Staging a property is of prime
importance to show off all of the attributes of a specific home, and to be sure
a potential buyer is not turned off because of something that has been
overlooked. Even though there has been significant growth in the market over
the past year, there are also many, many homes that have been on the market for
a significant amount of time, some for many months, and even years. In a
volatile market with the potential of a downturn, it is very important to sell
your home quickly to maximize your equity and profit.
The third
aspect to selling your home quickly and for a maximum profit is to be sure it
looks good - no GREAT - online and through the marketing of the property. It irks me to no end when I see questionable
photography and inaccurate information in a listing. Without a doubt,
the vast majority of potential buyers are going to look at your home online
prior to making a decision to visit your home. We are in a very busy and
hectic world, a potential buyer will most likely narrow down their search on
their computer, losing a potential buyer because of a lackluster presentation
is a major consideration today.
Having
Realtors make appointments at all times of the day, having the house in top
shape for every showing and having to move out the troops for those showings is
a bit of a pain! Our strategy and goal is always to sell the listing in as
short a period of time as possible. In my opinion, that achieves both the best
price for the home and the least amount of hassle and stress for you. Having
said that, the question remains should one sell first or buy first…
The first
question is whether or not you can be approved for financing to carry two
properties simultaneously, even if it is for a short while. The probability of holding two properties is
daunting to most, and that scenario got a lot of homeowners in trouble in the
latter part of 2007 and well into 2008 and 2009. Although we have seen that
many homes have sold quickly in Southern Alberta this past year, there is
always a possibility that a sale will take longer than anticipated.
I have
recently been in contact with a homeowner that has purchased a new home and
takes possession in the next month or so. They have explained to me what their
"bottom line" is in selling their existing home in making both
transactions work smoothly for them. The issue with having a “bottom
line” is that we are trying to predict what a buyer in the current market
is willing to pay for a specific property at this point in time. If that
price is less than the sellers “bottom line” there is only one outcome… they
will not sell their home... so they may be in for a huge reality check with two
homes and two mortgages. This is a scenario that I try to avoid for any of my
own clients, it can certainly get messy.
Alternatively,
one can make an offer on a property with a condition to sell their home within
a specific period of time. The issue
with this scenario at this particular point in time is that there are quite a
few buyers looking for premium properties and the inventory is quite low. So
the question is, would a Seller be willing to entertain an offer with a
condition to sell another home when they could possibly secure a deal in a
short period of time with no such condition? The other consideration is
this... even if you are able to secure a potential sale, in the current market there is a very good
chance that another buyer will come along and make a second offer on the
property, forcing you to make a decision on whether to move forward with the
purchase of the new home with no condition to sell your home, or walk away from
the purchase. Although it may not sound like a problematic issue, the fact
is that you will have made a decision to purchase the new home, and if you are
unwilling or unable to hold two properties at the same time, it is a
heartbreaking experience to "lose your new home". In my
experience, after a deal falls apart for this reason, the Buyer is now always
comparing their new search to the home they lost.
The third
choice is to sell your current home and search for a new home once an offer is
secured. The
advantage to this scenario is that you are totally aware of your budget
and what your home sells for. The disadvantage is the fact there may not be
a property that you like, or are able to secure, for some time. That would
mean you may have to rent or stay with friends or relatives until a property
comes up that works for you. Alternatively, you may settle for a home that does
not meet all of your criteria. This is what happened in 2006 when
there was such high demand for homes and scarce supply. Many Buyers may end up settling for something less than they are comfortable with in anticipation of purchasing a better home down the road when they anticipate the market will settle down. If the market fluctuates so that the value of the home
they “settled” on decreases, they may not be in a position to relocate for
quite some time and may very well be unhappy with their home for years to come.
The current
market in Calgary does seem to be leaning towards a “Seller’s” market, what we need to determine is whether that is a short term phenomenon or something we can anticipate throughout
the next year? Many in the industry are anticipating an ease in the market in
2013, and I would lean toward that prediction. There are many, many variables
that I feel will certainly affect our economy over the next year including the
world economy, the price of oil and gas, the “fiscal cliff” south of the
border, the European debt crisis, unrest in the Middle East and the list goes
on and on. We have fared well over the past year, and have essentially bucked
against both national and international trends. How long can we be an island in
the turmoil the rest of the world is going through? I would suggest that
if we see little or no changes in market values over the coming year, we will be doing
well.
Eventually
we will work through all of the chaos and will return to a “normal” market. in determining how to proceed in this market, one
should put a strategy together to anticipate at least three to five years
before we see things hit a predictable pace again. It is prudent to work through the pros and cons of purchasing, selling, relocating, upsizing or downsizing and if you feel
that is your best strategy for family and peace of mind, I would consider the
move sooner than later. If values do trend downward, your own affordability
may also start to diminish as the equity decreases in
your current home. If you are comfortable with your current location, putting
together a strategy to stay put for that three to five years will be paramount.
There is
nothing holding one back from looking at properties in anticipation of finding
a new home, just be aware that when you do find a property that ticks all of
your boxes, there may be a good chance of losing that home if a strong strategy is not
in place. I would be happy to to discuss the market further
and to put that plan and strategy together with you.
Every individual situation will be different on whether one should buy first, or sell first. By ensuring you have a well informed real estate professional assisting and working with you in making educated, well thought out decisions will certainly help minimize any unforeseen turmoil. Let me help you in making sense of it all...
