Are you wondering if you should buy or sell your home first when planning a move? The dilemma most people face is if they buy a new home first, they won’t have enough time to sell their current home. And if they sell their home first, they might not have enough time to buy a new one, perhaps not one that ticks all of the boxes anyway.
The chances of both the sale and purchase perfectly aligning are unlikely, so you need to consider a few things:
- How long will it take to sell your home?
- How long will it take to find a home?
- Do you have a place to stay in the interim?
- Can you afford to carry two properties?
Selling First
Selling your home before buying a new one is a practical option for most people, particularly for buyers who need access to their current home equity to purchase a new home.
Selling first also gives you the peace of mind that you won’t have the financial implication of carrying two mortgages. Also, it gives you a final budget to shop.
Knowing how much profit you made on the home sale tells you what you can and can’t afford when searching for a new home. This scenario is especially true when you’re trying to sell your home in a buyer’s market when homes are more likely to take longer to sell. You may have heard of the term, days on market or DOM. It refers to the length of time it takes to sell a home. If your type of home has a longer than average DOM, you may want to consider selling first, so you don’t end up buying a home and then potentially owning two houses simultaneously. The downside of selling first is that it’s not always the most convenient option and may require temporary housing in the interim.
If you have somewhere to stay in the interim, selling first can be a great option. It can also help with closing dates because you’ll have the flexibility to accommodate the seller, perhaps providing a leg-up in negotiating the price.
If you don’t have friends or family with extra space, it could mean spending money on temporary housing and storage, plus the added expense and inconvenience of moving twice.
Buying First
Buying first may be the better option for people with the financial means to carry two properties. Also, if you’re in a Seller’s market, buying first is expected when the likelihood of selling fast is high. If you’re feeling the strain of two mortgages, you may feel pressured to sell your home for less money or make more comprises than you would otherwise.
This scenario makes more sense in a seller’s market or a balanced market when things are a bit more predictable. This means there’s less chance of paying for two mortgages for an extended period of time.
If you’re looking to purchase a 4-bedroom home on a quiet street, in a sought-after neighbourhood, with a pool, and on 4 acres, your options will be limited and require more patience. In this scenario, you probably don’t want to sell first because you could get stuck in a position where you’re buying a home that you’re not completely happy with.
If you’ve found the house of your dreams, you risk losing it if you wait to sell your home first. In this case, buying may be the better option for you.
There’s no simple answer, and everyone’s situation is slightly different. We’re always happy to sit down with you over a cup of coffee and help you plan your next move.
