Whether you’re thinking of of moving up to a larger house, or downsizing, or maybe just looking for a change, the question of ‘Should you sell your current home first’ is a very common dilemma home owners face. Before going any further I’ll be upfront and say that there is no right answer.
In this article I will list the pro’s and cons of each approach, and also give you some tips to make the process as stress free as possible. Everyone is different, so there is no right or wrong answer. What’s right for you will depend on a number of factors including market statistics, budget, finances, and element of risk. The fact of the matter is that if you own a home and want to move on, you will have to do ONE of these things first and making a decision ahead of time based on the facts will make the process much more enjoyable.
Below I will outline the pro’s and cons of both approaches, along with some practical tips you can do to migrate risk. Review all the points carefully and give it some thought. You know yourself better than anyone else and what ever stands out to you more is probably the direction you should proceed.
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Buying Your Next Home First Before Selling
Buying your next home first before selling has become a very popular option for many home owners for a number of reasons. Easy access to financing options, a limited supply of homes available for sale, and a prolonged sellers market has given many home sellers the confidence that they can sell their home.
It’s the fear that the right house may not be available, or that they won’t find the right neighbourhood to live in that scares most buyers. If this is your situation then you might want to consider this approach.
Pros of Buying a Home First
- Allows you to take your time shop for your next home stress free.
- You aren’t committed so if your dream home doesn’t appear that’s ok- you aren’t in a rush.
- You aren’t under the control of the market, when the right home comes up you are ready, whether it’s tomorrow or 6 months from now.
- As long as we are in a seller’s market and your home is in good condition and is priced correctly it will sell.
Cons of Buying a Home First
- Once you buy a home, until you sell your current home you are on the hook of owning 2 properties. For some people this can be highly stressful.
- The flexibility you take by buying first you loose on the sale of your home. If you need to sell your current home you are more likely to consider the first reasonable offer you receive on your home. Like or not, when you’ve already bought and are committed you become a ‘motivated seller ‘. While the market value of a home is the same whether you have to sell or not, if you are a seller who wants to ‘test the market’ at a higher price then you might want to consider having a firm sale before buying.
Selling Your Current Home First Before Buying
Selling your home first is definitely the safer, more conservative approach and if you are tight financially then this is the route I recommend. If you’re thinking of selling, be sure to check out this article on the Top 10 Upgrades to Increase the Value of Your Home.
Pros of Selling First
- Once you have sold your existing home you can shop with confidence.
- If you are in multiple offers you will have more confidence knowing you already have your home sold. Don’t understand the power of confidence in negotiations.
Cons of Selling First
- There’s only 1, but it’s on everyone’s mind. What if I don’t find the right house?
It all comes down to this, what scares you more? The stress of handling 2 transactions or the stress of not being able to find the right home? In order to help you decide what might be the best course of action, here are some questions you will want to consider:
- If worse case scenario happens (and it almost never does) are you financially able to carry 2 homes until you can sell your current home?
- If you don’t get an offer on your home at the price you want, are you willing to lower it quickly to get it sold?
- Do you have any alternative arrangements of places to stay if you have to move out before you get your new home?
To Do List
My clients always ask me, “Jeff, what would you do in my situation?” Again, I am not you and everyone is different but here is the research I would do ahead of time to know the answers I need to make an informed decision.
Get Pre Approved
Not pre qualified, but pre approved. I would tell my mortgage person exactly what I am thinking and ask them to provide some different mortgage options. How much will it cost me to carry 2 homes on the off chance it doesn’t go to plan? Do I qualify for bridge financing? The best way is to give them scenarios and have them answer accordingly. At the end of the day I wouldn’t risk it if I can’t afford it- period.
Set a Budget
Figure out exactly how much you have to spend and create a list of needs and wants. Is it even realistic what you looking for? Chances are if there are no homes currently available that you like in the price range you can afford, then it might be that your price range is unrealistic.
Find Out What Your Current Home is Worth
Get your home appraised ahead of time. Here is the information you need to know: How much is your home worth and what is the average time (in days) it takes for a home like yours to sell? If it takes 60 days on average to sell a home then you will want to account for this in any closing period you negotiate on a new home. Contact me for a no obligation price analysis.
Get the Home Selling Process Started
Even if you are confident you will sell and are going to wait until you buy, there is nothing stopping you from starting the process. Decluttering, home upgrades and home staging are all things recommended if you want to sell quickly and for the highest price. Why not start now? The more you do ahead of time, the less stress you will have to deal with when you do sell. I always tell people that if they buy first, they should be prepared to list on a moment’s notice. From my experience, I’m always wary of people who don’t want to start the process of preparing their house for sale ahead of time. While their words may say they want to BUY, they act as if there’s a good chance it won’t happen. If you fail to plan, plan to fail.
I hope this article has helped you answer the question, Do I Sell My Current Home First or Buy First? If you have any questions about buying or selling a home simply fill out the form below and we’ll get back to you asap.
