Attention Homeowners: Should You Buy or Sell First?
Deciding whether to buy or sell first is one of the biggest questions homeowners face. The right choice depends on your unique situation, especially in a market that’s constantly changing. We’re here to break down the pros and cons of each option so you can make the best decision for you!
The Risks of Buying First
The Risks of Buying First
You’re ready for a change, and suddenly, your dream home hits the market. You jump at the chance to buy it, and while it’s exciting, there’s a catch: you still need to sell your current home. You’re potentially juggling two mortgages, and that stress can skyrocket.
This scenario can put you at risk of becoming a “motivated seller,” which might mean settling for less than you planned. Or it could put you in a position where you can’t close on the new house (that’s a whole other blog). A backup plan, like the option to rent your current home, can offer some flexibility if selling quickly doesn’t pan out, or finding alternative financing.
Timing Troubles
When you buy first, you may not know the closing date for your new place. Setting a later closing date will give you breathing room to sell your home without rushing. Sellers also tend to favour buyers who don’t have a property to sell, so having your home ready to go on the market if you buy first is a big advantage, and we’ve been able to leverage this in negotiations to set Sellers at ease.
Consider the Worst Case
Think about the financial “what-ifs” before you buy first. For example, if your home sells for less than expected, will your budget still cover your dream home, or would you be stretched too thin? Ariel shares his own experience with buying first here!
The Risks of Selling First
The Risks of Selling First
When you sell first, you’ll know exactly how much cash you’re working with. But on the downside, you might end up temporarily without a place to live or in a home that doesn’t quite tick all the boxes.
If your timing doesn’t align, there’s a chance you could find yourself moving twice—first into temporary housing and later into your new home. In this case, be ready to store your belongings and potentially bunk with family, at a cottage, or even a hotel.
More Options, Less Financial Pressure
Selling first gives you more flexibility financially since you’ll have a clear budget based on your actual sale proceeds. Financially, it’s often the safer route since the inconvenience is typically more manageable than a big financial hit.
What’s an SBP (Sale of Buyer’s Property)?
The Sale of Buyer’s Property (SBP) condition is a common real estate clause that gives the buyer a set number of days to sell their property before firming up on the purchase. If they can’t sell it, they can usually back out of the deal and get their deposit refunded. It’s a useful safety net for buyers but it’s not always attractive to sellers.
Pro Tip: Keep in mind that the wording of this clause can vary greatly, and how it’s worded can have significantly different impacts on your rights and obligations.
For example, a luxury home with a smaller pool of buyers may consider an SBP, while more affordable properties in popular areas are less likely to accept such terms. An SBP condition can include a clause that allows the seller to keep marketing their home for sale. And, if a new offer comes in, the original buyer has the chance to waive the condition, firming up on their purchase, or to walk away.
For Sellers, SBP Can Be Risky
Accepting an SBP offer can limit your home’s exposure to other buyers, which is risky if you’re also on a deadline to close on a new property. If the original buyer doesn’t sell their home in time, you’re back to square one. This is a complex topic that goes beyond the scope of this blog, so we’ll have to write another one that goes in-depth on things to consider from both sides of the equation.
So, Should You Buy or Sell First?
There’s no one-size-fits-all answer. It’s all about understanding your risk tolerance. If financial flexibility is your priority, selling first might be best. If timing and finding the perfect home matter more, buying first could make sense. Reach out to us to weigh out the options and plan for the best and worst outcomes, so you’re ready for anything.
What’s your move—buy or sell first? Let us know your thoughts in the comments!
