General Advice

Are you a homeowner who’s ready to move on? Whether you can finally afford your dream house or you’re simply ready for a change, this is an exciting time. Unfortunately, it may also lead to some stress. Selling one home and buying another means making some major decisions, and one of the biggest is which step to take first.

Take it from me, timing matters. Doing things in the right order can lead to less stress and a smoother transition. That said, there are no hard-and-fast rules. If you’re wondering whether to buy or sell first, the answer will depend on the market and your financial situation—not to mention your stress tolerance!

When you’re deciding whether to purchase a new home before putting your current living space on the market—and vice versa—here’s what you should know…

Buying a home first

Are you the type who can’t stop yourself from scouring online listings, even though you’re not quite ready to sell? If so, you may find yourself in a situation where you’re ready to buy before you even see an offer on your home. That’s not necessarily a bad thing!

Buying first can make the transition from one living space to another less stressful. It means you’ll have plenty of time to find the perfect place, without the pressure you’d feel if you were living in-between homes. On the flip side, it could also mean paying for two mortgages at the same time—something many people can’t afford, even for a short time.

Here are a few times when buying first might make sense:

It’s a seller’s market

There are times when Toronto’s market is so hot, almost every home is scooped up quickly. When that’s the case, it may make more sense to go the “buy first” route. Hesitating could mean letting the ideal property slip through your fingers. You can also take comfort in the knowledge that your home will almost certainly sell right away, too.

The home really is your dream

It happens all the time. A buyer starts browsing listings, just to get their feet wet. They see a home that blows them away, and…well, they decide to go and take quick a look. Before they know it, they’re making an offer—even though they had every intention of waiting until their own property sold. If you find yourself in this situation, don’t forget about your finances. But you should also remember that some opportunities really are once in a lifetime.

When to sell first

Does the idea of making a major purchase when your financial situation is up in the air worry you? If so, that’s understandable. The best thing about selling your home before buying a new one is that you’ll know exactly how much money you have in the bank. That means less uncertainty and less risk.

Here are a few times when selling first may be the right move:

New listings are up

When there are a lot of homes listed, you’ll have less competition as a buyer. That means you’ll probably feel less pressure to snap up the first property that catches your eye. Under these conditions, it’s also possible that your own house, condo, or townhome won’t sell right away—which could mean paying two mortgages until it does. That’s fine if money isn’t an issue. But if it could become one (or, in worse case scenario, you aren’t able to close your purchase and have to forfeit your deposit), you may want to consider selling first.

You’re prepared for a transition

Selling first could mean living between homes for a little while, which could spell inconvenience. Luckily, if you plan your transition well, it doesn’t have to! Whether it’s a hotel, Airbnb, or the home of a friend or family member, find a place to stay during the period between your sale and your next purchase. Once the logistics are taken care of, you can focus on the potential advantages of selling first!

Your current home is atypical

While properties in Toronto generally sell quickly, some have a slightly tougher go when the market cools. Unusual homes are a great example. I’m talking about that house with the unconventional layout—or the one that’s three times bigger than all the others on the block. If this sounds familiar, your agent can help you determine whether your home might take a little extra time to sell under current conditions. If the answer is yes, you may want to hold off on buying your next property.

A word on bridge loans

Of course, timing two real estate transactions is bound to be tricky. So what happens if there’s going to be a lag between closing on the purchase of a new home and the sale of your first? That’s where bridge financing comes in. This type of loan allows you to use the equity in your existing home to fund the mortgage on your new one. Once your current property sells, you can pay off what you owe (and the interest). To qualify, you’ll need to have firm agreements in place for both your purchase and sale—and your lender will want to see documentation. To learn more about the benefits and drawbacks of bridge loans, speak to a mortgage specialist.

The bottom line

Selling one home and buying another can be complicated—and there’s no magic formula for deciding which step to take first. What you can do is look closely at your home, your financial situation, and the market. Based on these factors, your agent can help you decide how to make sure your transition is a successful one!

Ready to sell your current property and buy your dream home? Get in touch, and we’ll set up a time to discuss your needs!

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