Should you sell your home first and then buy a new one? Or should you buy a new home before you sell? There is no right or wrong answer to this as the decision to buy a new home or sell one’s home first differs from person to person and every situation is unique. Let’s have a look at a few situations that might help you decide.
The downside of not buying the home first is that you might have to move into a short-term rental in case you do not find something of your choice. Moving into a rental property or living with friends or family even for a short while becomes difficult, especially if there are children involved. Not to mention the process of looking for property becomes stressful when there is a bidding war and at the same time, the clock is ticking.
You risk owning two homes including mortgages, utilities, property taxes, etc. if you buy a new property first but are not able to sell the old one. This makes the task of selling your current home more taxing and at times distressing. Besides, banks rarely ‘bridge finance’ a property if it does not have a bona fide Agreement of Purchase and Sale on it.
Not to mention that if you bought the property first, there’s a good chance that as you get closer to the moving day you might be willing to take any offer, which might not be the best you can get.
Though it is a tough market out there these days, it is still a seller’s playground. So if the house is not selling, first you have to identify the reasons that are resulting in potential buyers shying away.
As per our experience, one usually prominent issue in such cases is the pricing of the property. So make sure the price is right when you list and don’t compare yourself to your neighbours and what they got for their house three or four months ago. Be realistic.
In addition, it is also advisable to keep the closing date of selling the house long enough, around 60-90 days for those who have not bought a property before to avoid last moment jitters.
We always warn homeowners not to back out if they have already purchased or sold off a property even if they are not convinced about its correct price or if it is a right fit. If you are thinking to do so, you risk losing more than the deposit in backing out of the deal.
These situations are rare and during our long years in real estate business, such a situation emerged only once. A homeowner had agreed to sell the property and all the legalities were completed, signed and submitted. The seller later decided that he did not want to move because he was unable to find the property of his liking. Sadly, the situation got worse and both parties ended up in the court and Richard was acting for the buyer. The issue was seller was not listening to anyone’s advice and it proved costly as there were a number of deals that depended on the seller’s move.
Home buyers should remain patient and avoid making any hasty decisions when it comes to buying and selling. Due diligence and self-involvement are also needed from the sellers’ side including preparing their homes for its upcoming sale while conducting their house hunt. This means they should be open to the idea of painting, de-cluttering and minor renovations that were previously ignored in order to make sure their home looked appealing to potential buyers.
We are still in a sellers’ market and may be moving to a balanced competitive scenario. Very often you will come across many such listings, which are being reintroduced to the market because the owner was not able to sell for the desired price or the house was listed at a much higher price than it is worth and therefore could not be sold. And the only way the sellers were able to get this second chance was because they did not purchase the property before selling the current one.
Trying to make this decision can be a bit overwhelming, but we always advise our clients to sell their property first and later go to buy a new one. The idea is to always play safe, but selling first and then buying is always a lot easier than being stuck with two mortgages until your property sells. List your property, price it right and keep the closing date around 60-90 days. And then browse for the next property of your dreams.