Hey Dan,
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. Please do read through my last two Blogs...
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 your success in having a successful and less stressfull 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 paradym 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 paradym 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 take 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 conditions? The other consideration is this... even if you are able to secure a potential sale, 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 exactly what happened in 2006 where there was such high
demand and very little supply. Many Buyers ended up purchasing less than they
anticipated just to secure a place to stay. When this happens, many, many
buyers will want to find a new home that they anticipate living in for a short
time. If values fluctuate so that the value of the home they “settled” on
decreases, they may not be in a position to relocate for quite some time.
The current market in Calgary does seem to be leaning
towards a “Seller’s” market, however, is that just 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? If we reach the
predictions in this article I believe we will be doing well, however, I would
suggest that if we see 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. One should put a strategy together to anticipate
at least three to five years before we see things hit a predictable pace again.
In your own scenario, it may be prudent to work through the pros and cons of
relocating, 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 will also start to diminish as you will be pulling out less equity from 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.
Lauren, there is nothing holding us back from looking at
properties in anticipation of finding a new home, just be aware that when we do
find a property that ticks all your boxes there may be a good chance of losing
that home if we do not put a strategy together. I would be happy to sit with
you and Brad to discuss the market further and to put together a plan and
strategy together.
