Should You Sell Your Home Before You Buy a New One?
Are you ready to trade in one house or condo for another? Whether you’re downsizing, upsizing, or simply looking for a home that will suit you better, the process can be complex. Timelines are particularly tricky—especially when you’re deciding whether to buy a new home before selling your current one (or vice versa).
If you’re preparing to move from one property to another, consider these pros and cons before deciding which step to take first…
Selling first
Leaning towards putting your house or condo on the market before you start your home search? Here are the major upsides and downsides of going the “sell first” route.
Pros
A better awareness of your financial situation
Knowing the potential value of your home can help you plan for the future. That said, you can’t be sure how much money you’ll get from a real estate deal until it’s completed. Selling first allows you to budget for your new home based on how much cash you actually have—instead of the amount you’re likely to receive in the future.
You’ll be well positioned to receive financing
Selling your house or condo can help you pay down your debt. That’s important, because lenders are far more likely to approve your mortgage if have a good debt-to-income ratio. Put simply: selling first can help you get the financing you need to purchase your next home.
Less risk
Many buyers find and purchase their dream home first because they believe they’ll have no problem selling their current property afterward. The truth is, making that assumption is always a bit of a gamble—even when market conditions are in your favour. If you can’t risk paying for two mortgages at once, selling first may be your best course of action.
Cons
The moving process can be stressful
There’s one major potential downside of selling first. If you don’t have a new home waiting for you when you move out of your current house or condo, you’ll have to find temporary lodging while you search for one. The result can be a whole lot of stress, since renting is costly and staying with friends is often inconvenient.
Buying first
Many home hunters opt to buy a new property before selling. If you’re considering this strategy, here are the potential positives and negatives to keep in mind.
Pros
It could help you buy your dream home
What happens if you find the perfect home before you put the one you’re living in on the market? Many buyers find themselves in this situation. If you’ve assessed the risks and feel confident that you could handle a worst case scenario, you might want to consider buying your dream home before you sell.
You could get a better deal
Sometimes, home buyers find a deal that seems too good to pass up. Perhaps the seller needs to access some cash in a hurry, or maybe they need to relocate for work or family. Whatever the reason for a phenomenal asking price, you may want to think about making the purchase asap.
It’s more convenient
We already touched on this, but it bears repeating: buying first simplifies the process of moving from one home to another. Depending on your circumstances, the convenience of being able to immediately set up your belongings in a new space may be worth any potential risk associated with buying first.
Cons
It’s financially risker
The fact is, you just never know how soon you’ll sell your home. Of course, working with a great, well-connected agent will increase your odds of selling quickly. That said, there are no guarantees—which means you could wind up paying the interest on two mortgages. Our advice: always be aware of the risks, and know how much you can afford.
You’ll be living with uncertainty
Owning two homes at once can impact you in ways that aren’t just financial. If you’re trying to sell a house or condo while moving into a new home, life is bound to get hectic. Not knowing when the right buyer is finally going to come along can also make the situation more stressful.
Should you buy or sell your home first?
Quite frankly, it depends. The answer often has to do with whether you’re in a buyer’s or seller’s market, but your unique situation should always be taken into account. As real estate agents, it’s our job to help you weigh your options and make the best possible selling and purchase decisions.
On that note, we should also mention that if you decide to buy a home first, there are steps you can take to reduce the associated risks. Bridge financing can take some of the pressure off during the transition phase. Likewise, including a home-sale contingency in your contract with a buyer will ensure that you don’t have to complete your purchase unless you’re able to sell your current home. For more information about these options, ask an experienced agent.
Preparing to navigate the process of buying and selling at the same time? We have the experience to help ensure that the transition is smooth. Get in touch to start a conversation today!