I get asked this question every day – “Should I Buy or Sell First” ?! Similar to the long debated “chicken or egg” first theory – there are factors to consider on each side.
Whether you are thinking of moving up to a larger house, or downsizing, or maybe just looking for a change, the question of ‘Should you sell your current home first’ is a very common dilemma homeowners face. Unfortunately – there is no right answer. The type of market you are in – contributes to the confusion. Calgary is in a Sellers market right now for detached homes. A seller’s market means there’s more demand for homes than there is supply, and it’s what we see in most real estate markets across Canada today.
Everyone is different, so there is no right or wrong answer. What’s right for you will depend on a number of factors including market statistics, budget, finances, and element of risk. The fact of the matter is that if you own a home and want to move on, you will have to do ONE of these things first and making a decision ahead of time based on the facts will make the process much more enjoyable.
Buying Your Next Home First Before Selling
Buying your next home first before selling has become a very popular option for many homeowners for a number of reasons. Easy access to financing options like bridge financing (call us to find out more), a limited supply of homes available for sale, and a prolonged sellers market – has given many home sellers the confidence that they can sell their home.
It’s the fear that the right house may not be available, or that they won’t find the right place to live that scares most buyers. If this is your situation then you might want to consider this approach. I personally have many clients right now who sold their home and are in essence “homeless” – since they can’t find the perfect next one to buy!
Reasons to buy first:
- Allows you to take your time shopping for your next home stress free.
- You aren’t committed – so if your dream home doesn’t appear that’s ok – you aren’t in a rush.
- You aren’t under the control of the market, when the right home comes up you are ready, whether it’s tomorrow or 6 months from now.
- As long as we are in a seller’s market and your home is in good condition and is priced correctly it will sell.
Things to consider when you choose this option:
- Once you buy a home, until you sell your current home you are on the hook of owning 2 properties. For some people this can be highly stressful.
- The flexibility you take by buying first you lose on the sale of your home. If you need to sell your current home – you are more likely to consider the first reasonable offer you receive on your home. Like or not, when you’ve already bought and are committed you become a ‘motivated seller ‘. While the market value of a home is the same whether you have to sell or not, if you are a seller who wants to ‘test the market’ at a higher price then you might want to consider having a firm sale before buying.
Selling Your Current Home First BEFORE Buying
Selling your home first is definitely the safer, more conservative approach.
Reasons to Sell First
- Once you have sold your existing home – you can shop with confidence.
- If you are in multiple offers – you will have more confidence knowing you already have your home sold. Don’t understand the power of confidence in negotiations and less conditions may tip you over to win the home!
Things to consider when you choose this option:
- Well – there’s only 1, but it’s on everyone’s mind. What if I don’t find the right house?
It all comes down to this, what scares you more? The stress of handling 2 transactions – or the stress of not being able to find the right home?
Get Pre Approved
Not pre qualified, but pre approved. I would tell my mortgage person exactly what I am thinking and ask them to discuss my options. How much will it cost me to carry 2 homes on the off chance it doesn’t go to plan? Do I qualify for bridge financing? The best way is to give them scenarios and have them answer accordingly. At the end of the day I wouldn’t risk it – if I can’t afford it – period.
Set a Budget
Figure out exactly how much you have to spend and create a list of needs and wants. Is it even realistic what you are looking for? Chances are if there are no homes currently available that you like in the price range you can afford, then it might be that your price range is unrealistic.
Find Out What Your Current Home is Worth
Get your home appraised ahead of time. Here is the information you need to know:
How much is your home worth and what is the average time (in days) it takes for a home like yours to sell? If it takes 60 days on average to sell a home then you will want to account for this in any closing period you negotiate on a new home.
Get the Home Selling Process Started
Even if you are confident you will sell and are going to wait until you buy, there is nothing stopping you from starting the process. Decluttering, small home fixes, staging, upgrades – are all things recommended – if you want to sell quickly and for the highest price. Why not start now? The more you do ahead of time, the less stress you will have to deal with when you do sell. I always tell people that if they buy first, they should be prepared to list on a moment’s notice.