There are many questions to consider before you sell your home. One of the most important ones is whether you should Buy first and then Sell or Sell first and then Buy?
To many this may seem like a fairly simple answer. Sell, see what you get for your home and then look to Buy. Depending on the location/neighbourhood your home is in this may be the correct strategy. For others it may be smarter to look to Buy and be assured they can find what they want first and then Sell their home.
The first thing to consider when I ask my clients Buy Vs Sell First is “why are you selling?”. Are you downsizing? Upsizing? Are you looking for a similar home in a much different neighbourhood, perhaps in the city core, maybe a cottage?
The second part is, what can you afford to Buy and how will it impact/change your lifestyle? Its important to understanding how your monthly expenses will change and part of that is also having a clear understanding of what your home is worth today and what you may be able to sell it for. This is where a Comparative Market Analysis of your home is crucial and making sure your agent understands how to do this and explains the results to you in detail.
The answers to these questions will help you understand what the best strategy is for you and your situation.
For example, If you are looking to sell and buy a cottage, it may be in your best interest to look to buy a cottage first. Finding a cottage you like on a particular lake/area would probably take longer given there are less cottage listings than say if you were buying a condo in the city. So in this case it would be best to Buy first and then Sell.
If your plan is to stay in the same neighbourhood you should look at how long its takes to sell a home similar to yours, what is available in the neighbourhood for sale and how long it will take you to find your future home based on the criteria you have. If a double car garage is a must or a specific lot size, room size ect. be sure that what you want is available and how long it may take you to find it by examining how often a home fitting your criteria comes up for sale in the neighbourhood.
Finally you should look at market conditions at the time you are ready to make the move. The market has changed drastically in just the last couple months. Back in April it was best to Buy first because of the lack of inventory. Selling your home was practically assured given how competitive it was and buying was at times difficult given the amount of buyers. Now with more inventory, homes are taking longer to sell and it may be best to Sell first and then Buy.
Other things to consider when you BUY FIRST:
PROS – You have plenty of time to find the right home and are not rushed when you’re buying. This can be helpful when you’re trying to buy in areas that are competitive.
CONS – You may feel pressured to sell your house/condo quickly once you buy. Unless you can afford to own your new house and your existing house at the same time, you’ll definitely have to have sold your house or condo at least a week or two before you take possession of your new house, even if it means taking an offer that’s below what you really want. If you don’t, there’s a good chance you might not be able to get a mortgage on your new house which likely means you’ll lose your deposit and might get sued by the seller.
SELL FIRST:
PRO – You have plenty of time to sell your home and you don’t feel pressured to take a low offer.
CON – There’s some pressure on you to buy because you’ve already sold your home. You might have to move into a short-term rental or with family until you buy and take possession of your new home.
Summary – The key here is asking the difficult questions and taking time to analyze the answers as well as the current market ahead of time so you have the knowledge and are prepared for the worst case scenario no matter which you decide to do first. Having a agent that understands this will also help.
