A homeowner quandary: buy first or sell?
Which comes first, buying or selling?
We believe that since this is by far the most frequent query we receive, it merits both a blog post and a video.
Do you want to relocate or perhaps upgrade from your townhouse to a detached house? You’re unsure of the best course of action, though.
You are now faced with the decision of whether to buy first or sell first. Which has the most opportunity and the least risk is the best response?
The truth is that there isn’t a single correct response.
What matters to you in the end depends on a variety of factors. Ask yourself these questions therefore before deciding whether to buy first or sell first.
Which market are we in?
A Guelph real estate agent can give you the lowdown on the market, so call them first. A trustworthy realtor will provide you with all relevant market information without any pressure. Here, it’s important to understand the type of market we’re in and the specifics of what your house might sell for.
For instance, knowing that you are in a market where real estate bidding wars are common may have an effect on your choice to sell first.
In particular, adding a sale of property condition (SOP) to your offer will be difficult given this. In a sellers’ market where people are removing conditions to make their offers more competitive, it can be difficult to make a conditional offer in real estate, even though we always advise against it.
There are more buyers than there are available homes in a seller’s market, which is what we currently have in Guelph real estate. Real estate bidding wars are back, as we recently posted.
The homes that have been on the market for a longer period of time are the ones to consider if you’re a risk-averse buyer who wants a sale of property condition. These vendors are more amenable to haggling even though they might be overcharging.
Are you a picky eater?
Some buyers need to view 100 homes before deciding which one they prefer. Some buyers conduct their entire due diligence online and only visit properties that satisfy their specific requirements. Everyone is unique.
But if you’re a buyer with very particular preferences for style, cost, and location, you might think about purchasing first. Because there is no assurance you will find what you want if you sell first. Your online property search strategy is sound because you appear to check realtor.ca hourly, but there are no noteworthy updates.
The inventory might not exist, depending on your particular objectives and what you want from your home. Additionally, it might take some time before you find the right one.
What is your level of risk tolerance?
In almost everything we do, including buying and selling real estate, there is risk, let’s face it. There is risk associated with both buying first and selling first. How much risk (and potential reward) you can handle is more important here.
It might be best for you to buy first if you don’t like taking chances. You can be sure your new house will be ready when you move in this way. But if you’re extremely frugal, it might be best to sell first so you can determine exactly what your budget is for your new house.
So let’s now discuss The pros and cons of buying first versus selling first :
Pros of selling first
You’ll be completely aware of your financial situation. The main advantage of selling first is that you’ll know exactly how much money you’ll need to spend on your new house. This is because your house will have been sold at a profit. Your mortgage broker will be able to inform you of your eligibility for the best mortgage rate available.
Why does this matter?
Many people choose to buy first in a competitive market like the one in Guelph over the past few years based on how much they anticipate their home will fetch when they decide to sell. Then, a few weeks later, they list their home.
However, a number of factors, including comparable listings that are up for sale at the same time as yours, the condition of your house in comparison to recent sales, the market’s overall conditions, and more, can affect the sale price.
If you buy your house first and then can’t sell it for the price you want, you’re in a bind. Regardless of the price you receive, you must sell because you have already committed to the new location. Not the best location.
Boundaries of Selling First.
Selling first has the obvious drawback of forcing you to move on a specific date even though you don’t yet have a place to go.
As was already mentioned, if you’re the kind of person with very specific needs, you might not want to start by selling. There is, however, a workaround for this:
You can always ask for a lengthy closing date if you are selling first. Anywhere between 90 and 120 days could constitute a lengthy closing date. This gives you more time to look around and/or wait for the ideal house to appear.
However, if the closing takes longer than expected, a bank will usually demand a home appraisal. The home’s appraised value could be lower at closing if there is a protracted closing process and the market declines. This might have an effect on the buyer’s finances and might (although rarely) result in complications when the sale is supposed to close.
Benefits of Buying First.
By making a purchase first, homeowners have more time to ensure that the new home meets as many of their needs as possible. and take their time locating it.
The “traditional way” to conduct a buy/sell transaction is to buy first.
People who need assurance that they have a place to move to and who are risk-averse should use this type of process. Furthermore, you can wait patiently without running the risk of missing out if there are certain areas, designs, or features of a house that you really want.
Cons Of Buying First.
The main disadvantage of buying first is that you have already made the commitment to move into a new home on a certain date, but you haven’t even put your own house up for sale.
Financial risk is another factor. If your mortgage broker or bank pre-approved you for your new home purchase, it was probably contingent on receiving a specific sale price for your current residence. Furthermore, no one wants to take that path if they don’t. You’ll be forced to look for money.
The closing date of your current home should also try to coincide with the date you’ve agreed upon for the purchase of your new home.
If your best option for closing on your existing home is August 15, you need bridge financing to buy your new home on August 1 and “bridge” the gap until your existing home closes on August 15. This is necessary if you have just committed to taking possession of your new home on August 1 but the best closing date you can get is August 15.