Should I buy a new home before selling my own home?
Juggling the sale of one home while searching for another can be stressful. If you list your home too soon, you run the risk of having to finding a temporary place to stay and renting out storage space for your possessions. Wait too long and you might have to handle two mortgages.
Many sellers in active markets will not accept an offer conditional upon the sale of the buyer’s property. However, in most cases, a buyer does have options. Patrick Morris, the leader of the Morris Home Team and a Broker with Royal LePage Performance Realty, invites buyers to consider the following when making a decision:
BUYING FIRST
The first option is simple: if you have the money in the bank, or you have easy access to it through other investments, then go ahead and make an offer to purchase. However, not everyone has a few hundred thousand dollars, or a few million, in the bank or in investments.
If you’re in this position, a second option is to determine if you have enough equity in your current home to buy the new home or condo. If you’re downsizing from a larger home to a smaller one, you’ll likely have lots of equity in your current property or you may not have a mortgage. If you have enough equity in your current home, or it’s mortgage-free, speak with your bank or mortgage broker: they can arrange a line of credit or remortgage it so that you can buy the new home.
JUGGLING BOTH
What if you’re upsizing to a larger home and don’t have enough equity in your current home and you need to sell it? The options are limited, but there are still choices. Financial institutions will often use your other investments or a second property, such as a cottage, to help finance the purchase of your new home.
If you’re buying a new home with a long closing date of two to four months, you can still make the decision to buy it: it’ll give you time to sell your house. The caveat here is to ensure your property is in a salable location, is in well-maintained condition, the list price is attractive to potential buyers and the property is marketed with a professional Realtor.
Every property sells if the list price is realistic relative to the location, condition and layout of the home. If the property doesn’t receive an acceptable offer in the first week or two, a price reduction may be in order. And if the property does not sell, there is always the option of renting your home.
SELLING FIRST
If you don’t want the potential added stress of trying to sell your home after buying another home, there is another option: you can sell your current home before you buy another one.
In addition to giving you a budget to work with, it also gives you peace of mind and places you in a position of strength when negotiating with a future seller. You can normally agree to the seller’s closing date. However, if the closing dates don’t align, you can always get a short-term rental and place most of your furniture in storage for a brief time. It’s better to do this than to compromise on your future home’s location, condition and layout.
If there is a specific home for sale on a certain street that suits your needs and price point, or you’ve been waiting for that particular condo with a specific layout and location in the building, then go ahead and make an offer to purchase.
Having options like these will help you but always speak with your bank or mortgage broker and Realtor to get the best advice and guidance. As one of Canada’s top real estate agents, Patrick Morris is the leader of the Morris Home Team and a Broker with Royal LePage Performance Realty.
Patrick can be reached through morrishometeam.com or follow him on Facebook/Instagram @morrishometeam