Transacting real estate in a defined period of time can be a challenging process. Murphy’s Law dictates that when you need a quick sale the campaign will drag on and when you are in no rush to sell the agent fronts up with an offer after the first showing.
The best-laid plans usually become a mere guide once you venture into the real estate market. But a plan that turns into a guide is better than no plan that turns into chaos. Whether you are buying, selling or doing both, it pays to build a timeline.
When buying and selling – there are 3 distinct periods
Preparation stage for the seller – This is when you complete all the little jobs you vowed to do when you moved in. You have finally gotten around to doing it now that you are moving out. Your partner shakes their head at your ineptitude on these tasks, but you now hope a buyer admires your efforts. Depending on the amount of work required, allow 2 to 4 weeks prior to going on market. Removing tenants from an investment property can easily add 90 days to this stage.
Pre-approval stage for a buyer – Getting finance can be easier said than done sometimes. The self employed, first home buyers and buyers with minimal deposits can get caught up in the banks red tape before gaining finance approval. To discover that the bank is hesitant and requires more information in the middle of a negotiation can be stressful and unfair to the other parties involved. It is best and easiest to line up finance before beginning the property search in earnest. Getting finance approved can take up to 4 weeks even if you are relatively straight forward case.
Marketing Stage for a seller– Many sellers think the marketing stage is the only stage involved in the selling process. Seeing the signboard go up out the front of the house causes some people to begin packing up the house. Given the current market strength, the marketing period can be as little as 21 days. In a soft market, it can take up to 100 days to find the right buyer at the right price. Looking for a buyer is kind of like looking for love, it happens when it happens. There is no formula for success, whether it’s passed off as speed dating or auction with a deadline. It happens when it happens – which is why buying before selling is risky.
Property Search for a buyer – The stronger the market the harder it may be to find the right home and vice versa. The more unique or specific your criteria, the harder it will be to find the right home and vice versa. The average buyer takes between 60 and 90 days from the time they decide to buy til the time they are signing contracts. Never judge the merits of a home purely on the fact that you have only started looking, lest you spend the next 2 years trying to find a better one. Then you really will be in trouble with your better half!
Settlement period – Once you have found a buyer, negotiated a price and the contracts are unconditionally exchanged, you move into the final stage, the settlement period. The buyer has bought the house and cannot back out of the contract but the seller still owns it until the sale settles. The settlement period is negotiable with most contracts marked with 42 days as a starting point. It is common for settlement periods to be as long as 4 or even 6 months. A negotiation that is stuck on price can often be bought together manipulating the settlement period to increase value for both sides. If you are buying and selling your primary residence, whether you buy or sell first, ensure that you get a long settlement. This will provide you with enough time to achieve the second part of the equation, to buy a home or sell your existing one.
If you are aware of and plan for the time lines involved at each stage, you are a better chance of managing the turbulence of the real estate roller coaster.