What comes first? The Chicken or the Egg? Buying or Selling?
It's the same question everyone who needs to sell and buy a home asks, and there is no simple, all inclusive answer, except one...it depends! There is no hard fast "right" way to approach the buying/selling process, but it is important to understand the possible consequences of either route. Examining what is most important to you and how you would deal with the possible outcomes will help you decide.
Buying first will allow you to be more discerning and wait for the right house to come on the market. This takes the pressure out of the buying process. Buying a home is a big decision and you should not compromise. In a seller's market, you will not feel stressed when encountering bidding wars and difficult sellers. You will have the luxury of walking away confident that you have time to find what you need and want. Consequently, the ability to walk away from a deal gives you more power in the negotiating process. (The person with the least motivation, has the most power) This detachment to the outcome will help you make a better decision and mitigate the emotional aspect of the buying process that can cloud your judgment.
The other side of this coin is that once you find the home you want, the race is on to sell your home, and more importantly, close it in time for your purchase closing. If you are unable to close your sale before, or coinciding with the closing of your purchase, you could run into problems securing financing for the new home. You may feel pressured to accept a lower price than the home is worth in order to line the closing dates, and in return, have to finance more of the purchase than you planned. It is imperative that you research and prepare for all contingencies. You may end up paying two mortgages while you wait to close your sale, or, you may have to arrange Bridge-Financing. Talk to your lender before you start the process and educate yourself on all the fees, penalties and costs involved.
SALE OF THE BUYER'S PROPERTY
One way to minimize the risk of buying first is to make it conditional on the sale of your property. (typically for a short time period - less than a month) Depending on the market, it may be extremely difficult to get a seller to accept this condition. If the seller does accept the sale of the buyer's property condition, normally, they will be allowed to continue marketing and showing the property and, in the event they receive an offer that is satisfactory to the seller, you will have 24 to 48 hours to waive the condition and firm up the deal, or, walk away and let the seller take the new offer.
In any scenario that sees you buying first, it is wise to completely prepare for selling your home. This means all paperwork, pictures, marketing materials, staging, etc. so when you do find your dream home, you can have your home up for sale the next day. This is especially important if you buy conditional on the sale of your home. By showing the seller that you are prepared, they will be more likely to consider the condition. The seller will pay close attention to your efforts to prove you are following through.
Selling first helps you to know exactly how much money you have to purchase a new home. You will not find yourself grasping at low offers and can hold out for market value. As stated above, this gives you a stronger position when negotiating. However, if you have difficulties finding a suitable home to buy after you sell your home, you may be forced to purchase a home that is less than ideal, or paying more than you needed to for a home because you lacked the ability to walk away. Both cases can leave you feeling regret afterward.
If you have trouble lining up the closing dates, you will need to have a back up plan. This may be staying with friends, a short term rental, or negotiating (read paying more for) a later closing date.
LIKE A BOY SCOUT (without the knots)
It pays to be prepared! Be aware of, and prepared for all possible outcomes, consequences and options. This will help relieve a lot of stress from the buying/selling process. If you deal with the emotion of a certain outcome BEFORE it happens, you will be in a better headspace, and be better prepared for it when, or if it does occur. This will allow you to be more rational and less emotional which will result in a better solution for you.
My knowledge of the current market conditions coupled with my experience/wisdom in these matters will help you consider all the options, and determine which course of action is best for you.
Call me anytime at 416-450-4503 to talk about what is best for YOU! or...Fill out the form below!