The ideal scenario is, of course, to sell and buy at the same time, but this isn’t always possible. Is it really necessary to sell your property before purchasing a new one? Are there benefits to doing it the other way around? Many people ask themselves this very question.
In fact, both situations come with their share of advantages and disadvantages. It all depends on real estate market conditions, your personal circumstances and even your temperament.
ADVANTAGES
Not Having to Carry Two Mortgages at Once
With current high interest rates, it goes without saying that acquiring a second property can really strain your finances. A situation you will have to contend with so long as the first house hasn’t found a buyer, which may take several months. Some homeowners who have found themselves in this situation had to significantly lower their price to avert disaster.
One Less Thing to Worry About
Similarly, paying two mortgages and having to manage two homes at once can generate a lot of stress. Going through the process one step at a time (selling, then buying) can really lessen the pressure and help you avoid feeling overwhelmed by a huge list of tasks.
More Time to Choose Carefully
You might not end up choosing very wisely if you find yourself anxiously rushed into purchasing a house because you prefer to buy before you sell. By waiting to sell first, you will be giving yourself ample time to visit properties and determine your actual needs.
Getting the Best Price
Imagine having to cover the expenses of a second property while not having sold the first. As previously mentioned, you’ll eventually be forced to drop your price to attract buyers. You certainly don’t want this! It makes more sense to wait patiently for a buyer who will pay fair value for your house.
Knowing Your Actual Budget
You don’t truly know how much money you’ll make on the sale of your home until you’ve actually sold it. In fact, you may not get the original listing price at all. For example, buyers may negotiate a lower purchase price or offer less due to an issue detected during the inspection.
DISADVANTAGES
Having Little Time to Move
Selling before buying can generate a feeling of urgency to find a new home or to pack up your belongings and clear out to allow the new owners to move in. It’s true that you can set a longer closing period, but in certain cases this condition could cause you to lose the sale.
Extra Stress
While selling before buying minimizes financial stress, it can cause a great deal of stress in other ways! Indeed, your family is no doubt eager to know where they will be moving to following the sale. Will it be in the same neighbourhood? Will the new home live up to everyone’s expectations? Will the children have to switch schools? Not having answers to such questions can be anxiety inducing.
Potentially Missing Out on Your Dream Home
A homebuyer’s greatest fear is losing the opportunity to acquire their dream home because they themselves haven’t yet sold. Admittedly, you might stumble upon the ideal residence while visiting properties before you even have a purchase offer, should you decide to do so.
If so, you could put in an offer conditional to the sale of your property. However, if the owner of the house you want receives an offer from another buyer and conditions are met before your own, you will have to quickly find a buyer for your own home. There’s a risk that the deal will fall through in the end, but it’s worth a shot.
In either case, a real estate broker is in the best position to help you search for a home that exactly suits your needs. Good luck!