Prepare for the Worst
Think about the financial “what-ifs” before you buy. 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!
Q&A | Buying First
1. Should I buy or sell real estate first?
The answer to this depends on your risk tolerance. Selling first comes with the inconvenience of not finding a house to buy, meaning you may need to rent or find temporary accommodations. Buying first, on the other hand, carries the financial risk of owning two homes — can you manage this? Will the bank approve you? Can you rent one property out temporarily? Your real estate agent can provide guidance and advice based on your unique circumstances and market conditions.
2. Can I make my offer conditional on selling my house?
Yes, you can include a Sale of Buyer’s Property (SBP) clause in your offer to purchase. However, this clause is not favourable from a seller’s perspective, so depending on the level of interest they have or their confidence in receiving a better offer, they may choose not to accept it.
3. Is buying a house before selling risky?
Buying a home before selling can be risky, but if your home is ready to list, your price expectations align with market value, and current conditions favour sellers, that risk can be minimized. It’s best to consult a top real estate agent in Milton for insight into your specific market.
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.
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.
Q&A | Sell First
1. Do I have a backup plan for where to live?
Selling first means you risk not finding a home in time, so you could incur extra moving expenses for a second move and the inconvenience of moving twice. Lining up alternative, short term living arrangements could ease the transition.
2. Can I change the closing date of my sale?
Our sugestion would be to sell with a long closing date, perhaps four or five months, giving you plenty of time to find a house. Altnernatively, you could try negotiating a clause that permits you to adjust the closing date, forwards or backwards, giving you flexibility with the purchase.
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!
