in the current housing market environment,you're better off listing asap,then waiting..I'd rather rent for a short time, then wind up with 2 homes for a long period of time

Knowing where you're from would be somewhat helpful because some markets are seasonal. When we listed it was Memorial weekend, we'd missed the peak and had almost no showings in the next 9 months until February rolled around then we were very busy from the 2nd week in February until we went under contract in March.

Same situation as you, broke ground in October IIRC, our house ended up being ready early yet we had no buyer and came close to losing it.

Get the house listed asap and rent if you have to. Your market could end up going down more (if there are any buyers to begin with) which may end up costing you $20+K like it did us.

We're in the Madison, WI area. We're thinking of doing one of the flat fee listing services, but are worried about wasting valuable time. The flat fee MLS services are quite popular around here though, and I'm honestly not sure what more a realtor would do, other than add in some convenience, and charge us commission.

We put our house up for sale immediately after breaking ground. It sold the first week, but, as luck would have it, the couple who bought it had a condo to sell and agreed to let us rent back until their condo sold. We rented back for several months, but ended up having to move to short-term housing until our new house was done.

Still, better than having two payments, and it was nice to have the cash on hand before converting our building loan to a mortgage.

If I were you, I'd put it on the market now, then rent if you need to. We broke ground last November, put our house on the market in July, and it sold in December--just one week before we moved. That was too close for me and we had to double up on house payments for 2 months. We were very lucky it sold at all. If you do have to move and live in apartment, you won't have to worry about keep a house clean/mowing while you are building.

When is the big selling season in your area? My guess would be the summer.

Although a pain to move twice, would you be saving money by renting close to where your new house will be? If so then sell during your biggest selling season and rent.

Renting you don't have to worry about any big costs related to your current house if something breaks, you'd be close to the build, if you have kids in school they'd be in the correct area for schools etc.

Here is the timeline we lived thru.
6/06-contract for new home build. Prepared to list at any time.
3/07-developer finally obtains building permit, pours foundation.
5/07-list current home for sale
7/07 new home framed, old one unsold. Market softens rapidly.
8/07 Re-list home @ $50K less than first listing.
10/07 contract of sale @ 96% of new price. New home still unfinished. Given closing date of 11/15/07.
10/30/07 Close on sale of home. Put belongings in storage. Move in with my mom for what is expected to be 2 to 3 weeks.
Week of 11/5/07 Builder of new home, faced with cash flow issues, stops all construction. Email sent to president of company with questions.
Week of 11/12/07 Builder still has not responded to our email. Attorney consulted-after meeting tells us we have grounds to cancel and expect refund of all monies paid in thus far (approximately 5% of agreed upon price). House hunting begins in earnest. New home found. Offer accepted.
11/20/07 close on the new home. Call movers and give them the new address.
11/20/07 to present-legal proceedings against builder resulting in summary judgment and placement of liens on every parcel the LLC owns within our state. No refund as of yet. Construction never resumed in the subdivision. Builder abandons project.

We had NO REASON to expect this outcome. We checked everything out thoroughly regarding the developer. We are out some money, but in the end the best thing that ever happened to me was the bad feeling I got in the pit of my stomach in the middle of the night at my Mom's and the decision that we came to over coffee the next morning.
There are two families who were not as lucky. They live in beautiful homes amidst construction debris and lots with 4 foot tall weeds. They have no access to the amenity center which was completed but never opened. Their homes are not worth anywhere near what they paid. They can't refinance. They can't sell.

TRK, sounds like a terrible story.

I would say if you're set on building you post for sale ASAP and deal with the logistics on any timeline between the sale and build later, if you're lucky.

If you're unlucky, you'll have 2 mortgages but no logistics problem.

This isn't what you asked, but...No way would I start building a house in this economy. Real Estate is still falling like a rock and will continue to do so for at least a year, probably longer. Are things so different in Madison?

trk65 -- Sorry for your travail. Did the builder declare bankruptcy? Sounds like you should get a judgement for all monies returned because the builder failed to perform...but will he have the money...will you actually collect? (Probably not, but as you said, you are in a better place than the poor souls who closed on his houses and are *stuck*.)

gobruno,

As others have said it probably would be good to list now, however, alot of factors enter into a decision....what is the buying and selling climate in your area; find out from some local real estate places about the "days on the market". Do you have a 'back-up' plan? If your old house was to sell quickly would you be able to rent right away? And, 'heaven forbid', if your place does not sell by the time your house sells would you rent it out?

The only thing that saved us is that we had built a shop with an apartment inside to live in so we had somewhere to live. Good Luck!

chisue says:
"This isn't what you asked, but...No way would I start building a house in this economy. Real Estate is still falling like a rock and will continue to do so for at least a year, probably longer. Are things so different in Madison? "

The price of building a home is not going to cost less as much as the value of an exisiting home will decline...I actually think if you see ahome you like,or have the $$$ to build one,just do it...Sure a home you buy today may be worth less in a year,bit maybe not..Interest rates are historically low,can they get lower,possibly..But the risk to interest rates is greater to the upside in the next 12 months then much more lower..
And finally,your home is just that a HOME..Not an ATM, not a retirement vehicle,a place where your family grows,memories are made,a place to call your own..If it is worth more or less when you go to sell at some point in the future,so be it...Good luck

gdognj -- Would you be OK to be upside down on a brand new home -- maybe for years? What if there's a crisis and you have to come up with cash quick? (Maybe our OP has lots of savings that are not going into the new build, but if not...I'd be cautious.)

chisue, can you be upside down for awhile? yes, can you be upside right at some point,yes...Can your home be worth more today, and significantly LESS sometime in the future? absolutely..The point is you NEVER know, and to wait until someone tells you "all is well",time to buy,might be either too late, or so far in the future that you've lost 5 years of your life...also,in lieu of purchasing,you likely need to rent, and that money is gone forever...

gdognj -- I should have been more clear that it's not just the RE market that concerns me, although a house is the biggest purchase many people ever make. I'm cautioning that the economy is currently unstable, and will likely remain that way for a couple of years. The RE market is only part of this equation.

If the OP needs cash out of the existing home to build, perhaps it would be best to list and sell, then rent during the build. The cash available to build with would then be a known factor.

Gobruno -- we live about 1 1/2 hrs north of you and we are in the same dilemma. Our current home is 6500+ sq ft and sits on an entire city block. So selling this place first is a must before we even think about breaking ground on our new/smaller retirement home. I work for a realtor, and he suggests putting it on the market asap, and we have already reserved the cover of a local real estate magazine for immediate exposure. It's going to take the right person at the right time, and we are prepared for a long wait. But that's fine with us. Only bad thing is the rising taxes on this property. As both federal and state budgets are in the tank, local property owners will ultimately bear the brunt of the deficits. We are paying $600 per month property tax, and that is going to skyrocket over the next two years. Our local school budget went up 10% this year, and that has not even taken into consideration cuts in state budgets. Locally, our city council is running amok with spending. Our little village of 1600 has the second highest property taxes in the state. So bottom line, having to rent while the new house is being built is just fine with us. The new house is outside the city limits, hopefully will have some type of geothermal heat, and we will be on well and septic. We are looking at good savings on all counts.

joyce_6333 -- To me, your property taxes seem low. Maybe home costs are greater here. Our RE tax is about 1% of market value. We are 30 miles north of Chicago. I think we get tremendous value received for our taxes; makes it a little easier to pay them!

Good luck finding that special buyer! Sunday's paper listed data from the third quarters of '08 over '07: Here the number of homes sold declined 40%, but the median price increased 10% to over $1M. There are some very large properties on acreage that have been on the market for *years* -- some historic, some 'just big'. These, along with contemporary styles, always take longer to sell.

If you can afford to carry two mortgages or are debt free and/or your income is completely secure, then go ahead and build. Worry about selling your old home later.

But if you have a mortgage on your current home that you can't afford to carry along with any mortgage on your new home, you should sell first and rent, or just not build at all. Right now nobody -- and I mean nobody -- knows where the economy is headed. There are indications that housing has bottomed in some areas, but these might be false bottoms, with more unpleasantness to come. Only time will tell.

Thank you all for your thoughts. We've been hemming and hawing about our strategy, and you all point out the many considerations we need to take into account. As somebody pointed out, I don't think anybody can predict the economy and there is never a perfect time for anything.

What's interesting is that a few years ago when real estate was booming, everybody would have thought it was a great time to build. Now, many of those homes are not worth what the buyers paid for them. Right now, I know everybody is pulling back, but cost to build in our area has gone down significantly. To build the same house in the next year will cost us significantly less than had we built 2 years ago. We are planning to build our Forever home, raise our kids, and hopefully live in the home until retirement. So, we are thinking of this long term.
We plan on pricing the home pretty realistically and competitively and are willing to take a small loss on it to sell it quickly. We want to minimize the amount of time we will be displaced and also don't want to carry 2 mortgages. We have 3 small kids and a large dog--not easy finding a rental to suit that configuration. I guess we want our cake and to eat it too. We both have great jobs, but in this economy, is anybody safe?