Buy Before You Sell VS. Sell Before You Buy
“Is it better to buy your new home first? Or, should you sell your current home and then plan to buy after?”
Unfortunately this question doesn’t have a direct yes or no answer, it depends on several different factors that are unique to you.
What factors do we need to consider?
- The current real estate market conditions.
- What your goals are right now.
- Your relative comfort with risk-taking.
Today’s Real Estate Market
We are currently in what is called a ‘seller’s market.’ This type of market happens when the demand for housing is higher than the inventory itself. There are more buyers looking for homes than there are available properties for sale.
This market is very beneficial for a seller because it not only means a short time on the market, but buyers go to greater lengths to seal the deal resulting in the flexibility for the sellers to list their homes for more money with more favourable terms and conditions.
In a seller’s market, buyers need to be ready to act quickly and have the cash in hand to provide a deposit with a quick turnaround. They need to be prepared to bid for the property and negotiate aggressively to win. For inexperienced buyers, a seller’s market can be a stressful and chaotic time without the help of an experienced real estate professional.
Cons of Selling First in a Seller’s Market:
If you sell your house first with a 90 day closing period, you are really only giving yourself 90 days to buy a home, or else your family might be without a place to live. So in a seller’s market, where properties are easier to sell than they are to buy, this can be a pretty big risk.
Pros of Selling First in a Seller’s Market:
After reading that there’s a chance you might not be able to find a home in time before your closing day period, you may be wondering why would someone want to sell before they buy? But there are also lots of benefits to selling first. Some of those include:
- Selling your home first means you will have more cash in hand to leverage when buying your next home.
- Selling first will give you a better idea of the type of budget you need to work with.
- If you know you want to sell first, you can always place beneficial terms and conditions to ensure you have enough time to find a new place.
What About Buying First?
The main disadvantage of selling before buying is that you might feel forced to choose a home that doesn’t quite suit your specific needs due to a quickly approaching closing date on your home. Due to this you might end up settling for something you aren’t absolutely happy with.
The main pros of buying first include:
- You aren’t dealing with tight deadlines so you can pace yourself finding your new home.
- When you decide to finally sell your home, you can create terms and conditions that are favourable to you based on the terms of your own purchase.
Cons to buying first:
- Selling first gives you a monetary boost that can help determine the budget for your new home purchase. You may need that money in hand to facilitate your next purchase.
- What if your home takes a long time to sell? Or if the market changes in the time between buying and selling?
If you buy first and then the market starts to slow down, you may end up selling your home for less money than you initially hoped for. We have seen this happen in the past to individuals who bought homes at the peak of the market, but then when they tried to sell a month later, the market had completely changed.
If you’re planning to buy first, it’s critical that you have your current home ready to sell right away. That way, you are planning to buy and sell in the same market. It will help minimize some of the risks involved with buying first.
How am I supposed to know if the market is going to change?
We can help you see if the prices are starting to trend in one particular direction, and show you how to maximize your benefit in each case. For example, if prices are starting to trend upwards, you might be better off buying first so you can take advantage of lower buying prices and higher selling prices. However, if the prices are trending downward, a better strategy might be selling first at a higher price, then buying at the lower price.
The truth is that your decision is entirely up to you. Before making the decision to sell or buy, it’s important to understand current market conditions and what your specific goals and concerns are. Your trusted real estate professional can help provide you with insight and guidance, but it’s all about determining the risks you’re comfortable taking.
What we CAN advise you on however, is that if you are planning to sell your home in the next few months, you need to start planning now. We’re here to help you along the way!Contact Us!