Did you sell home before building?

raya7694April 3, 2010

We have to decide whether to start building while our home is on the market or wait. If we wait my son wouldn't be in the correct school. We would live with in laws during the build.

The only other option is if we build in the builders subdivision he would do a contingency and would take back the house to sell.

I really want to get started but am so nervous about two house payments.

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If you are worried about two house payments, I would sell first.

You could probably time your build to be the least disruptive of the school year. Also, I know of folks who have gone ahead and had a utility (i.e., water) stubbed in with their name and the new address on the bill at their new property and forwarded the bills to their address through the post office. This allowed them to use a utility bill for proof of residency for the school year while building. They were in the same situation . . .temporary housing would require a change of school districts. It is playing a little fast and loose with the rules but really not sure who it hurts as your children if they left the school would be coming back in a few months anyway . . . just a thought.

Of course if you did it this way you would have to not use the school bus.

    Bookmark   April 3, 2010 at 10:42AM
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We could afford two house payments, but really didn't want the stress of owning two houses at the same time. We went ahead and put our house on the market and ended up selling the first month. We lived in an apartment for a few months while we finished building.

My kids were allowed to attend the new school. We had to show house plans and our construction loan agreement from the bank. We were required to have already begun construction. We had a glitch in that none of the paperwork showed our actual address so I ended up having to obtain an out of district transfer. It was just a formality.

    Bookmark   April 3, 2010 at 3:37PM
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We sold our house first so we wouldn't have to stress about it. We are now in a rental while we build. The old, new, and rental house all are in the same school district so that wasn't an issue. I did ask the school district what would happen if we couldn't find a rental in the same distric, and they said it wouldn't be a big deal, but the superintendant would have to sign off on it.

    Bookmark   April 3, 2010 at 4:17PM
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We only had to show our sales contract with the address on it in order to register our kids in the new school district. We ended up living in another district for 3 months while the new home was completed.

    Bookmark   April 3, 2010 at 4:21PM
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Selling and building houses is stressful enough without doing them both AT THE SAME TIME!! I would sell first but I am a "worrier" so it was the ONLY way for me!! It took us 4 months to sell right in the middle of the "economic
downturn" in '08. Very stressful; I'm sure it is still that way!
Good Luck!

    Bookmark   April 4, 2010 at 11:47PM
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The good thing about selling your present house first is that you can devote all of your time to the new house instead of needing to spend time cleaning and keeping the yard nice. The bad thing about selling your present house is that is another move.

    Bookmark   April 5, 2010 at 10:36AM
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Well, our situation was a little unique. Our housing market was horrible when we sold...took us 14 months, and 2 price reductions to sell. So, we would've been in a bad situation if we would have started building before selling. However, like I mentioned, our housing market was horrible to start with!

We're living in a home owned by my parents for utilities only, so we have a great set up!

Personally, i'm very conservative, so I would almost always sell first before building.

    Bookmark   April 5, 2010 at 11:17AM
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We sold first, and are now living in a rental while we are building. Our rental is driving us nuts. It is small, and there are 6 of us and a dog. It has no yard for the kids to play in or for the dog to run around. It was a major pain to move things into the rental and half of it in storage. Still, we would have done it no other way. We've sold several homes, and it is always unpredictable how long it will take to sell. In these economic times, we had no interest in rolling the dice. There were homes in our neighborhood that took almost 2 years to sell. There are nice homes in the area that are still on the market after 3 years, but there are also those homes that sell in a couple of months. Ours took 4 months to sell. As somebody else said, this whole home building process is so stressful, adding the stress of selling a home on top of it would have put me over the edge. Our kids will have to change school districts when we move into our new house, but at least we found a rental in our current school district so that the kids would only have to change schools once. Anyway, good luck whatever you decide.

    Bookmark   April 5, 2010 at 12:55PM
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I sure wish we HAD sold before building..

We started building in July of 07, just before the real estate downturn in our area.. I wanted to put our current house up for sale then, but my DH didn't want to do a double move. Homes were still selling in our neighborhood, and our last 2 homes had sold very quickly(1 in 3 days, the other in 10 by owner!)

We waited until Feb 08 before putting it on the market and by then things were going from bad to worse. After 10 months on the market and a 15% price decrease.. with our new home ready, we decided to rent out the other house. We did not need the equity out, but never planned on having a rental home.

During the course of building(we were also GC's) it was very stressfull having all the showings. They never are at a convienient time, and we never wanted to say no.. and the worse the houseing market got, the more demanding the prospective buyers became.. like can we come in 30 min.. !

Good luck!

    Bookmark   April 5, 2010 at 3:55PM
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Last time we built, we put the house up for sale the week we dug the hole for the basement. We gave ourselves 6 months and we were able to move door to door. This time we are waiting for the house to sell. We will then move into a cheap rental, thus saving even more money while the house is being built. I can live in just about anything for 6 months! We can't swing it this time, if the house didn't sell before the new one was ready- with 2 mortgages plus land! Yes, it will be a pain to move twice, but I needed to take the time stress factor out on this build.

    Bookmark   April 6, 2010 at 6:06PM
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This post is perfect in timing for me. We just signed a contract with a builder and we're hoping to break ground the beginning of October. We originally planned to put the house on the market in January, hoping to avoid the double move. But, DH was really worried about being overly stressed doing it this way so we put it on the market last Wednesday, just to be safe and give it enough time. It went into contract at full price on Saturday!

I am freaking out right now because we close and lose possession on 9/30, a month after school starts. We can't find any suitable rentals in our school district but found something perfect 5 miles away but a different school district. Called the school board and found out we have 90 days from the sale of our house before we would be charged $40/day per kid (2 kids in the district) in tuition if we live outside the district. Our calculations put that at a total of $5600 if everything goes smoothly with the build and we finish on time. Unlikely, I know.

I know I can live anywhere for 6 mths but I am really worried about my kids, two girls (9 & 3 and one boy 6). All we can find are two bedrooms. Oh, and we have a dog, which limits us too.

All that said, I think this situation is the lesser of two evils. I know my husband would be miserable if we were currently building and selling, and that in turn would make us all miserable. But, it sure would have been nice to have a crystal ball and know we didn't need to give ourselves quite so much time to sell.

Good luck to you in whatever decision you make.

    Bookmark   August 16, 2011 at 9:01AM
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I did FSBO on craigslist shortly after we started moving forward w/ our builder. We could afford the two mortgages, but I wanted to get the stress of selling the old house over with, if necessary. (That, and I didn't want to PAY for two!)

Our 1st home ended up selling within a few months, so we moved into a tiny, 1 bedroom apartment with two big dogs. Very few places were available and even less that took pets. We were in that apartment longer than expected, and it was NOT FUN :) However, I agree with others...... moving twice and living in a small space temporarily was worth getting the home selling over with. It helped to clear our minds and focus on the build....

    Bookmark   August 16, 2011 at 11:56AM
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I wanted to put our first house on the market when we started building our new home. (The mortgage on the first house was already fully paid off so everything we made on the sale could have gone into reducing the mortgage on the new house.)

Although it was starting to cool, we still had a pretty good seller's market at that time and I figured it would sell in about the same length of time it would take us to finish building the new house.

DH said "no, let's wait. Our luck, it'll sell immediately and then we'll be stuck moving twice." So, we waited... then we ran into huge issues with our builder and it took us 23 months from the time we broke ground to finally get the new house finished enough to move into. DH said, "Aren't you glad we waited to sell house #1."

Unfortunately by the time we'd moved into our new house, the seller's market in our area had totally turned into a buyer's market and prices had fallen... a LOT.

DH doesn't want to sell our first house now because he is convinced that if we just wait awhile longer, the seller's market will come back and we'll be able to sell it for a lot more. And, since it is paid off, all it is costing us to keep it are the taxes and insurance premiums. So, now we own two houses and are renting one out which is actually bringing in a little bit of income. But I never wanted to mess with being a landlord and am finding it to be exactly the kind of PITA I imagined it would be. So frankly, I still wish we had put the house on the market way back when...even if it had sold quickly and we had wound up living for over a year in a rental somewhere.

DH still thinks we did the right thing by waiting to sell. Obviously, one of us is wrong. Apparently, even hindsight isn't always 20/20. LOL!

    Bookmark   August 16, 2011 at 6:58PM
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Oh, heavens to Betsy...there is no way we would have started building before we sold our house. Our dear friends, who actually built where we are building and their previous house was in the same 'hood ours was in...did that. They broke ground in the fall of '08...right when the market tanked, and the economy of our bank-driven area went with it. They didn't end up selling their house until they had been living in their new house for 9 months! They took a severe hit on their house when they finally sold it.

We actually went into this process because of the wonderful deal we got on our lot, and the fact that custom builders in our area were very willing to deal since no one was building ANYTHING at the time we went under contract. I really didn't think we would have been able to build this house, which really is my dream house,dream neighborhood, at the pre-bust pricing. It all worked out timing wise...we had a decent offer on our old house, we moved into a rental house, and were able to do the building process knowing exactly how much we had to spend. We are waaaaay too conservative to gamble on waiting to sell! Moving twice isn't great...but worth it to us.

    Bookmark   August 16, 2011 at 9:16PM
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We broke ground on our house in January of 2010 and put our old home on the market in March of 2010. It was kind of risky but we were hoping to take advantage of the home buyers tax credit both as a buyer and seller. That meant selling our home before April 30 and moving into our new home by June 30. We signed the contract on our old house at 11:30 pm on April 30 and moved into our new house June 22nd, 2010. When we started the process we had no idea what a wild card the bank could be. Our credit was in good shape, we had been preapproved for our loan and we had what we thought was an ample down payment but like many home builders we under estimated the cost over runs and the pre- appraisal on our house plan fell far short of what it was going to cost to build. We already knew we were going to have to lower expectations on what we could get for our old house. That meant we were in a situation where we might have to come up with much more cash for the down payment than we had originally budgeted. That too worked out, because the final appraisal came in much higher than the first one.

It was a little like threading the needle but it turned out OK and as a result saved us a lot of money both in moving expense and taxes. Was it risky? Absolutely. Would I do it again? Probably not. It was pretty stressful and a lot of things could have gone wrong. Had we sold our old house first we would have had a lot fewer unknowns.

    Bookmark   August 17, 2011 at 7:14PM
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We are currently trying to sell our house so that we can start building. When we bought this house, we were limited on what we could buy because we hadn't sold our old house. We don't want this mortgage restricting our ability to build our "dream house". We had 2 mortgage payments for 9 months last time, so we know you can't predict how long it will take to sell. We will move into a rental house once this house sells. Not crazy about moving twice, but it's better than the alternative. After 5 months on the market, I can't imagine dealing with trying to sell while building. It will be nice to have this over with so we can move on and concentrate on the new house.

Regarding schools - we also had that issue as our son started kindergarten this fall. We didn't want to send him to our current school for various reasons including the fact that we will likely move during the school year. We can't send him to the school where our land is and it would be impractical anyway. (I looked up the rules and we could send him to that school if we give them a copy of a building contract saying the house will be completed during the school year.) For now, we are sending him to a private school that is half way between here and our land which we may end up sending him to permanently.

    Bookmark   August 18, 2011 at 12:04PM
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We put our home on the market when we knew that we were relocating to another state. My husband relocated 2 months before I did, while I stayed behind to prepare the house to sell in a tough market. We had 12 homes in our neighborhood for sale, half of them were new construction. So I made sure our home could stand up to the competition of the new construction. We received and accepted an offer on our home while we were 3 states away in a meeting with our general contractor and our real estate agents to build our dream home.

We are currently in transitional housing, an apartment. Although I will have to drive about 20 miles every morning, we did not want to put our daughter in a school zoned for the apartment. She already had to move away from her friends from her former school, so we didn't want to put her through that transition again in a few months after our home is complete. I provided the preconstruction contract to the school and she is registered.

    Bookmark   August 19, 2011 at 12:50AM
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Yes, I've been living with my in-laws in a small patio home with my DH and three kids for the past 10 MONTHS!!! We've made a lot of great memories here. It will always be a special time we look back on but... I am SO READY TO MOVE. Our closing date is this Friday. We moved here November 20! WOW! LOL! If I can do it, you can!!!

    Bookmark   September 23, 2011 at 8:37PM
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We broke ground on our house in April...we just put our home on the market (FSBO)...my DH did not want to move twice. Now that we are living through the stress of taking care of two residences, packing to move, wrapping things up at the new house, trying to keep the old house clean and presentable for prospective buyers....I would HIGHLY recommend selling your home first, living in a rental (where you don't have to maintain landscaping, etc) while you are building. Move almost everything into storage and then you can focus all of your efforts on the new bild. JMHO though...

    Bookmark   September 25, 2011 at 12:21AM
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Capegirl05-Thank you! We put our house on the market in late August before we had even finished our plans. It sold in four days! We move into our rental on Friday. I have been totally stressing about having to live in a rental for so long but your post made me appreciate how fortunate we are and how much more fun the building process will be. Good luck to you.

    Bookmark   September 26, 2011 at 9:31PM
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For those of you selling FSBO, how's that working out for you? We had our house on the market since March and only had 2 showings and zero offers. Pathetic. We've just taken it off for the winter and will try again in the spring with another realtor or FSBO. We're definitely selling before building. Seems like in this market a realtor isn't really worth it, especially considering the commissions paid out in the end. We can make time to show the house, get an MLS, but I am afraid of taking the risk, thinking a realtor may have an advantage. We wanted to build this summer and now it looks like next year at the earliest.

    Bookmark   September 27, 2011 at 12:39PM
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That depends on how deep your pockets are. As for us, we have had this house on the market for over a year waiting for it to sell before we start to build.

We bought the lot over 4 years ago and my DH has the house plans drawn up, but we are waiting in this unstable housing market.

Good Luck in whatever you decide.

    Bookmark   September 27, 2011 at 12:48PM
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Brad Edwards

Sell your house first and get a rental home if you can for a year if you think its going to be long term. I mean if you can get it down with your builder where it will be 1-2 months many apartments have short term leases. Anybody can do a month or two in an apartment, just make sure you go out a ton and don't stay in it if your a large family. Shoot think of all the trips to the new house site.

I wouldn't want to stay in most apartment complexes for more than 5-6 months with everything all boxed up and kids etc. sounds like a nightmare.

    Bookmark   September 27, 2011 at 1:44PM
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We've been on the market since March and have had 10 showings. That's not a lot for most areas, but it is for where we are. I'm pretty sure we've had more than anyone else in our neighborhood which I attribute to the pro-like pictures I took for the listing. A cheaper house in our neighborhood just went off the market after being on for several months and I don't know that they had any showings. Our neighbor's house is $30-40k overpriced and they had almost no showings for the first 9 months or so. Then a couple months after we listed, they went out and had a pro photographer take pictures of their house. Now they are getting multiple showings despite their price. Several of our showings were people who came out to this neighborhood and only looked at our house even though there were 1-2 others within $10-20k, so we know the pictures have made a difference. Granted, we still haven't sold, but the more people in the door, the better. I just looked at what has sold since we've been on the market and only 3 houses under 50 years old have sold on this side of town (we're on the far side, away from the 'big city'). Whether you have a realtor or not, take a look at your listing pictures and make sure they showcase your house in the best way possible (no dark rooms that are hard to see or pictures of furniture instead of the house, etc). If not, make your realtor take new ones or do it yourself. Use or borrow a camera with the widest lens possible (I rented an ultra wide angle lens for my DSLR).

Regarding Realtors, we had one for the first 3 months at the usual 6%. Our current realtor is a local 'flat fee' agent. We paid $499 for the listing plus $99 for the lockbox. At closing, we will pay her .5% plus the 3% to the buyer's agent. So, 3.5% plus $598. We did this so we could lower the price as much as possible, but still have it in the MLS. Turns out, she's been more helpful than the full commission agent was. I've also been doing a lot of the work on my own - the pictures, I made fancy flyers and a website and have been posting it as many places as I can.

If you are doing FSBO, go to Postlets.com and make an account. It's a syndication website that will post your house on several websites including several that the realtors use (Front Door, Zillow, etc). It will also give you html code you can use to post fancy looking ads on Craigslist and other websites. It's very simple to use - just enter your house info and upload some pictures. I have been using it even though we have an agent. HTH.

Here is a link that might be useful: Postlets

    Bookmark   September 28, 2011 at 9:53AM
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We waited for our home to sell. I'm glad we did. It ended up taking nine months to sell. On top of that, our first buyer fell through because his financing didn't pan out...four days before the closing date. So we thought we had it sold and were packed up and ready to move. It was a nightmare. I would not have been comfortable juggling two notes even though (more than likely) we could have moved right into the new home because of the timing. Also, because we made money on the sale, we can use that money for our downpayment and feel more comfortable having more money in the bank than living with the unknown.

We've known about five people recently that have been unable to sell by their closing/move-in date on their build. So a couple are paying their old mortgage along with a new, higher mortgage and just crossing their fingers and the others ended up having to rent out their previous house.

    Bookmark   October 6, 2011 at 11:08PM
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We sold our old house first since we really needed the money to begin construction, then there was the risk of it not selling and being stuck with two mortgages which was not a pleasurable idea. We rented a small, cramped house during construction but survived.

We plan to build again in two years, we will be selling first and probably staying with our in-laws to save on rental money ($5,000 in rent saved can really help during construction time). But we're lucky enough that the in-laws have a huge 5,000 sq ft victorian house with a three bedroom/ 1 bath upstairs on the opposite side of the house, which is not being used currently. If they had a smaller house we'd probably rent somewhere though. Our decisions really come down to money though, some people can afford to have two mortgages while building...

    Bookmark   January 27, 2012 at 12:57PM
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We planned on keeping our old home as a rental from the start. I have managed rental properties for 10 years so I am comfortable with all of the issues that surround it, not to mention the awesome tax benefits in addition to the income received if you can rent it for more than your payment and repairs.

We decided to start advertising our house for rent a month after we broke ground to give it a few months so we could be picky about the tenant. We leased it out a month later and had to move to a tiny apartment for the remaining four months of our build.

Thank goodness we were the GC and NEVER at the apartment other than to sleep because with two little boys (1yr and 3yrs) and two dogs it was a nightmare. Trying to take the dogs out with the boys wanting to run...I want to remove all of those memories from the databank:)Oh not to mention the 2 storage units we had that somehow all of our cooking utensils and pots and pans ended up in even though the boxes were clearly marked...plastics forks for dinner!

    Bookmark   January 27, 2012 at 2:48PM
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We sold our home first. Didn't want to risk two mortgage payments.

    Bookmark   January 27, 2012 at 4:11PM
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We have no choice but to wait, but we have had our house for sale for almost 3 years. That was not expected because we are in a smaller city where our market wasn't as bad as metro areas. Mostly, has to do with a boundary issue in our school district. Long story. Anyway, we have a very small buyer pool but it is picking up! I hope this is our year. I dread renting because we have 7 kids and 1 dog. I'm not sure we can find a big enough rental with a short term lease. It's torture waiting and reading GW doesn't help!

    Bookmark   February 1, 2012 at 12:12AM
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