Buy First or Sell First?
Every month, thousands of homeowners are faced with the stressful dilemma of whether to buy first or sell first. If you buy before selling, you could run the risk of owning two homes. Or, just as bad, if you sell first, you could end up homeless.
The ideal scenario is to buy and sell at the same time, but this almost never happens. The choice of whether to buy first or sell first really depends on your own financial circumstances and your aversion to stress.
The least stressful method is to list your home for sale while you are searching for a home, sell first to determine exactly how much equity you have, and then buy the home that most closely suits your needs. In this case, your offer to purchase can be basically unconditional if you obtained pre-authorized mortgage approval.
The risk is that you may not find the home of your dreams in this time frame. If you can rent for a period of time while you continue your search, selling first may be the best way to go for most people.
If you selling an expensive home to downsize, it might be best to sell first in order to see how much money you are going to realize for the new purchase.
If you looking to trade up to a new home with specific features, it might be best to find your dream home first, then sell your home afterwards. You may be forced to accept a slightly lower amount when you sell, depending on the timing of the purchase and your eagerness to avoid owning two homes.
It is important that you consider the net proceeds after commissions, legal fees, mortgage fees, etc. The answer may be different based on the home that you find. If you find a once in a lifetime dream home, and you can carry both homes for a reasonable period of time, you may want to commit to purchasing first.
To protect yourself, ensure that there are conditions on financing and conditions on sale of your existing home in your offer to purchase your new home. You should make the offer conditional of sale and if accepted, the Vendor will notify you if another offer is being presented. At such time, you will need to decide to go ahead with the purchase or terminate the contract.
You will need to determine which alternative is best for you.
Please contact us and we would be happy to meet with you to discuss your particular situation.
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