One of the biggest questions I get asked by downsizing clients is which should they do first. Sell the house or find an apartment. The answer is: it depends. There are advantages and disadvantages to both. In this article I’m going to cover the points you should consider when deciding what is best for you.
Selling Your Home First
One advantage is you know exactly how much your home sold for and thus how much you have to invest to fund your retirement. Many clients want to invest the equity in their home to produce an income they can use to pay the rent and other living expenses.
The second advantage is you know exactly when your closing date is, and you now have a firm date to plan your move around. If your preference is to look for an apartment after your house is sold, it makes it difficult to do anything more than a preliminary searching for potential buildings if you have no idea when the closing will be. You can go on a waiting list for preferred buildings but if an apartment comes available, the landlord will expect you to sign a lease to secure it.
Also selling first eliminates the expense of having to pay the monthly carrying costs of both your house and an apartment. This can be an expensive proposition, even for a couple of months.
The big disadvantage of this option is you will have to scramble to find an apartment once your house is sold. And there is a small risk you could be caught without a place to move to. Thankfully I have never had this happen to a client, but I have had a few clients have to settle for an apartment that wasn’t exactly what they wanted or move to an area they didn’t really want to go to. This also means that you may be making a second move in a year to an ideal apartment when your lease is up.
Ideally, if you are planning to sell first, you should have a backup plan of somewhere you could move to (family, cottage etc) if you can’t find a satisfactory apartment.
I also advise any clients who are looking to sell first to negotiate a closing date of 60-90 days down the road. This gives you up to 3 months to look for an apartment. Any less than a 60 day closing and you have a higher risk of not finding a great apartment. And remember even if your home sells in 1 day you don’t have to be out until the closing date you have agreed to with the buyer.
Rent an Apartment First
The main advantage is you are able to find the perfect apartment for your needs. The right apartment, in the right area with the desired amenities and at a rent you are comfortable with. This eliminates the need to rush to find a place after your house is sold. A huge stress reliever for most people.
You also know the cost you will be paying for rent so this allows you to do any budgeting you may need to do.
You also know the date the apartment is available. Knowing when the apartment is available allows us to time the listing of your house to minimize how long you are paying for both. For example if you apartment is available to move in for April 1st, you ideally would list 30-60 days prior to that. So somewhere between February 1st & March 1st.
The obvious downside is you have to pay carry both house and apartment for awhile so there are those additional costs. Typically if an apartment is available now or in the near future, the landlord will require you to sign a lease and pay deposit and rent right away to secure the apartment.
Since Halifax is still in a housing shortage of both homes and apartments, I suggest to clients it is easier to secure an apartment prior to putting your home on the market as the upsides outweigh the downsides. It does however mean that the client has to be willing and financially able to carry both properties until the house sells. Typically this would be 1-3 months max but in a limited number of cases it could be longer. Only you know your financial situation but I want to layout the options for you so you can decide what is best for your situation.
Roy Thomas SRES® (Senior’s Real Estate Specialist) is a REALTOR® with Sutton Group Professional Realty. Since 1991, Roy specializes in helping retirees with their later in life real estate transactions. Call Roy at 902-497-3031 or contact Roy here