Should you buy a new home before selling your existing one?

Homeowners who are considering selling their property need to decide whether to want to buy another home before selling their current one or to sell first and then buy.

For homeowners facing this decision factors like whether you are moving locally or to another province or country, whether or not you have children in a particular school, and the question of a deposit all play a crucial role.

The advantages to selling your home first include the following:

  • Deposit: The most obvious advantage to selling your current home first is that you’ll cash out the equity in your current house. You can then use this money as a deposit on your next home. This is one of the most common reasons for selling first.
  • No contingency – subject to offer: Many agents will write offers with a ‘subject to home sale’ clause, meaning the offer is contingent upon the buyers selling their current home within an allotted time – to free up the deposit. If you can avoid writing this contingency by selling first, you’ll make a stronger offer, which could be a trump card in a competitive market. In other words, selling first might help you to land your dream home before someone else has a chance to snatch it.
  • Predictable bond payments: By selling first you remove the possibility of needing to make two bond payments simultaneously. In fact, if you’re able to live with friends or family during the short-term gap between selling and buying, you may be able to pocket a few months’ worth of bond payments too. This can help you to build up cash reserves to cover various moving and other expenses.
  • Greater focus: If the idea of selling and buying simultaneously overwhelms you, you may find peace of mind in focusing on one step at a time. By selling first, you can concentrate on improving and staging your property to make it show-ready, and stay in your home while you patiently wait for the best offer.

On the other side of the coin, the advantages to buying a new home before selling your old home are:

  • You only move once: If you sell your home first, you’ll need to move twice – first to temporary accommodation and later into your new home. This doubles the hassle and results in the process (from start to finish) dragging out longer. In contrast, buying first ensures that you’ll only need to move your belongings once, and you won’t need to bother finding a storage unit or a month-to-month rental.
  • Shopping time: If you buy first, you give yourself ample time to shop around for a home you truly love. You won’t feel under pressure to close on another home quickly just because your short-term lease is about to expire, you’re tired of sleeping on your sister’s couch, or the school year is about to start. If you’re in a competitive housing market in which you might need to make offers on multiple properties, enjoying the luxury of time can be particularly valuable.

Deciding on whether you want to buy or sell first is thus largely dependent on your personal circumstances and preferences but by looking at your finances, how quickly you will need to move and working with a knowledgeable local real estate agent will help you make the right choice.

Article Source:

Join The Discussion

Compare listings