This is an age-old question, and one that anyone considering buying or selling should give careful consideration. The good thing is, there is no right or wrong answer – just the one that is right for you.
I would recommend considering the pros and cons depending on what kind of market you are in. In a buyer’s market, there are more properties on the market than active consumers looking to buy in the region. In a seller’s market, there is a shortage of properties for sale and many potential buyers looking to purchase. Breaking it down, it’s the famous economic supply versus demand concept.
In a seller’s market, which has often been a reality in many parts of Ontario for some time, you may find yourself faced with a shortage of homes available to purchase. In this case, buying first may be the more pragmatic choice, especially if a home you find checks all the boxes of your “must have” list. Whereas, in a buyer’s market, you might want to sell first and take your pick from a pool of abundant inventory options in an environment less likely to be riddled with competing offers and bidding wars. But these have been rare in Ontario as of late.
With either approach, there are risks. That’s why, you should discuss both strategies with your real estate professional before you make your decision.
From a pros and cons perspective, selling first gives you the financial comfort of knowing exactly what the sale of your existing property will generate, letting you factor the exact amount you will have and would like to spend on a property. Doing so may also reduce the stress of possibly owning two homes for a period of time. When selling in a seller’s market, you will want to consider the scenario of bidding wars and the higher probability of having to compete with other buyers to secure the home that catches your eye.
Should you choose to buy first, you can be confident in having time to find that special home that ticks most or all of the “must haves” on your new home wish list. This can be far less stressful because you are not under pressure to purchase before a closing date on the sale of your existing home.
When choosing to buy first, then sell, to protect yourself, you may want to speak with your salesperson about submitting an offer that is conditional on the sale of your current home. This could be less attractive to the seller especially in a “hot” seller’s market, where other interested buyers may be willing to waive such a condition, however, worth a discussion with your salesperson.
It would be wise to establish back-up plans for either scenario.
If you decide to sell before you buy, look into the availability of short-term rentals or ask to stay with friends in the event there is a gap between leaving your old home and moving into your new one. Or, before you sell, investigate whether you qualify for bridge financing to help cover a variety of potential costs until your current home is sold if you have to take possession of your new home before you sell.
Regardless of which route you decide to take, talk to your real estate professional and fully understand the risks associated with each scenario before you make any decisions. It could save you a lot of stress.
Contributed By: Joseph Richer is Registrar of the Real Estate Council of Ontario