April 2020: Homeowners Conundrum: Buy or Sell First?

Dated: June 5 2020

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HOMEOWNERS CONUNDRUM: BUY OR SELL FIRST?:

So here is the situation. Do you buy your next home before selling?  Or do you sell your current home before buying? The Answer: It depends. Every case is going to be unique, and most of the time, the market is going to influence your decision.  There are several factors you should consider. For example, What are the current market conditions? Are you financially capable of carrying two properties with ease?  How quickly can I find a property that will meet my needs? Where will I live if I sell first and can’t find something? As a Realtor®, I can help you figure out the best course of action for your situation.

We are currently in a hot seller's market, so if you are planning to sell, I would advise you to buy first.  In a hot seller's market, houses are selling so quickly that if you are serious you must act quickly. I believe that if you're able to, it is best to buy first.  This way, you are not rushing or settling to find somewhere to live, you can make sure the new house fits as many of your needs as possible.  Although buying first has advantages, it is not always financially feasible.  Its always best practice to consult your lender to discuss the possibility of arranging interim financing.   If you want to buy first and do not have the financial ability to carry two properties, you will want to use a “sale of home” condition.  This, however, can make your offer among competing overs less attractive to the seller.  The significant risk to buying first is you may be unable to carry two properties. Carrying two properties can become very stressful, and you may end up reducing your home to get a quicker sale; it is much easier to negotiate from a secure financial situation.

The significant advantage of selling your home first is knowing precisely what you have to spend on a new place.  By selling first, you can avoid the stress and cost of your house not selling, this is a worst-case scenario, but it does happen.  Most lenders approve financing for your purchase generally by at least having an Agreement of Purchase and Sale in under contract for your current home.  If you are unable to sell your existing home before you take possession of the newly purchased one, you might not be able to get the mortgage you require to close on the property; then, horrible things happen.  If you can get a mortgage, carrying two mortgages as well as all the carrying costs can be very expensive.  Another advantage of selling first is that you can avoid bridge financing costs.  Most of the time, Sellers are not able to match the closing dates of the older and new house, meaning there could be days, weeks or sometimes month(s) difference.  Bridge financing (essentially borrowing the equity in your home until it closes) can be expensive, as you carry the cost of two mortgages temporary until the properties close.

So, should you buy or sell first?  If you are moving from a less hot market to a hotter real estate market, you will probably want to sell first.  If you are moving from a hot market to a cooler market, then buying first likely makes more sense.  If you are more concerned with purchasing the right new home then selling your current home for maximum dollars in a short period, buy first.  If maximizing the sale of your existing home is your number one priority, sell first.   If you are thinking of buying and selling, I’m happy to talk you through your options and help you decide if you should buy or sell first, contact me today.

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Norma Rae Mechetuk-Bradshaw

When you work with me, you can count on personal, attentive service, excellent knowledge of the area, great negotiation skills, marketing and sales strategies.....

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