Building a new home is a stressful process. There are plans to consider, materials to choose and of course, the sale of your current home to navigate. Unfortunately, planning the sale of their existing home is something many homeowners overlook or leave to the last minute.
When should I talk to an agent about selling?
As a rule, the earlier the better.
“Many people want to know what price their property can achieve to determine what they can build and, to some extent, the build process,” says Jeremy O’Rourke, Managing Director of Lodge Real Estate.
However, there are more advantages than simply getting an estimated sale price. If an agent understands what price you’re after, they can organise a programme that has the best chance of achieving it. That may include recommended modifications to your existing property, such as a fresh coat of paint, or simply having someone to help you time your sale when there are less competing properties on the market.
“The earlier these discussions occur, the greater the array of options available to home sellers,” Jeremy says. “Leave it too late and some of those options start to vanish.
“If you want to start building in March, for example, and your new build is dependent on selling your current house, contacting us in March is likely to put the sales programme under immense pressure. Chances are, you won’t achieve the best sale price for the property.”
When is the best time to sell?
It really is up to the seller. Depending on your financial circumstances, you may need to sell your current property before you can build. If you’re financially secure, you may decide you can finance two homes for part or all of the build. It’s not unheard of for homeowners to use bridging finance to help them stay in their current home until their new build is complete.
“Some home sellers want the certainty of moving from one house to the next without any interruption, or intermediary step, so they’ll wait to sell until their new home is complete,” says Jeremy. “Then there are others who will seek to time the market, but they’ll have the necessary financial security to hold out for an upswing."
“Banks and mortgage brokers can offer a range of financial options, so it is important to understand what these are early in the process.”
Most people don’t want to have to move twice. However, invariably, most home sellers have to rent for a period before their new home is completed. While arranging to have a longer settlement might seem like the obvious way to avoid this, the reality is this could hamstring your home sale.
“When we discuss settlement periods with home sellers who are building new we ask what their ideal timeline would be,” says Jeremy. “Often it’s something along the lines of “we'd love to sell today with a 12-week settlement because our house will be available then”.
“Unfortunately, finding a buyer who will agree to a 12-week settlement is not always easy—and it may not be the person who's prepared to pay the most money in the market. In this example, the seller has to choose whether to chase the money or the 12-week settlement.”
Consider alternative living arrangements
Timing the settlement of your old home with the completion of your new one is notoriously difficult. With this in mind, it’s wise to consider what alternative living arrangements you may need to make. If you plan to rent, it’s worth talking to a property manager to understand what the market looks like, as well as what costs to expect.
Always have a plan B
If your old home doesn’t sell, what will you do? Your fallback options could include renting either your old or new home, or to sell the new home instead of the old.
“Selling your freshly built home may not sound like a great thing to do, but it depends on what your financial circumstances are,” Jeremy says.
It also depends on why your old home isn’t selling. Is it due to price? Are there issues with the property that need addressing? It’s important to consider what your overall finances will look like if you were to hang onto the property and whether you can easily overcome the problems with the property.
The best way to avoid these scenarios again comes down to talking with your agent early. There are many, many decisions to make when it comes selling a house—and even more when building one. Add the two together and it is easy to overlook critical aspects. That’s where your local agent comes in. An agent can help organise the finer details of your transition, freeing you up to focus on the bigger picture.
“All of these little things put stress on a family, and building and selling is stressful enough as it is,” says Jeremy. “We see people leaving it too late where their new build is completed before their current home is ready to sell. It puts them under immense financial pressure.”
In a nutshell, ask for help. You can’t plan for what you don’t know—and the more prepared you are, the fewer surprises you’ll have.
Thinking about building new?
Check out our free guide on new build pitfalls to avoid so your next home goes up without a hitch!