Should you sell first or buy first?
Is it better to buy first and sell later, or vice versa? This is an age-old question, and one that anyone considering buying or selling should give careful consideration. The good thing is, there is no right or wrong answer — just the one that is right for you.
Consider the pros and cons depending on what kind of market you are in. In a buyer’s market, there are more properties available than there are active consumers looking to buy. In a seller’s market, there is a shortage of properties for sale and many potential buyers looking to purchase. Breaking it down, it’s the famous economic supply-versus-demand concept.
In a seller’s market, which has often been a reality in many parts of Ontario for some time, you may find yourself faced with a shortage of homes available. It this case, buying first may be the more pragmatic choice, especially if a home you find checks all the boxes of your “must-have” list.
In a buyer’s market, though, you might want to sell first and take your pick from a pool of options in an environment that is less likely to have competing offers and bidding wars. But these have been rare in Ontario lately.
Selling first allows you to factor the exact amount you will have to spend
With either approach, there are risks. That’s why you should discuss both strategies with your real estate professional before you make your decision.
From a pros and cons perspective, selling first allows you to factor the exact amount you will have to spend on a property. Doing so may also reduce the stress of possibly owning two homes for a period of time. When selling in a seller’s market, also consider the scenario of bidding wars and that you might have to compete with other buyers for a home you want.
Should you choose to buy first, you can be confident in having time to find that special home that ticks most or all of the “must haves” on your new home wish list. This can be far less stressful because you are not under pressure to purchase before a closing date on the sale of your existing home.
When choosing to buy first, then sell, speak with your salesperson about submitting an offer that is conditional on the sale of your current home. This could be less attractive to the seller, especially in a hot seller’s market, where other interested buyers may be willing to waive such a condition.
It would be wise to establish back-up plans for either scenario.
If you decide to sell before you buy, look into the availability of short-term rentals or ask to stay with friends in the event there is a gap between leaving your old home and moving into your new one. Or, before you sell, investigate bridge financing to help cover a variety of potential costs if you have to take possession of your new home before you sell.
Regardless of which route you decide to take,
Talk to your real estate professional and fully understand the risks associated with each scenario before you make any decisions. It could save you a lot of stress.