Milton Real Estate - Katherine Barnett, Broker

Should you Buy or Sell first?

  • Katherine Barnett
  • 22 September 2015

To buy or to sell first? That is the question. Unfortunately, there isn’t an easy answer, and there certainly isn’t a one-size-fits-all answer. It’s a personal decision that should take into account your current situation and tolerance for risk or more accurately, which kind of risk you prefer. Buying first increases the risk of higher expenses. Selling first increases the risk of having to live between homes.  

Buying First

Buying first can make the house hunting experience more enjoyable. Without a closing date impending on your existing home, you’ll have time to wait until the right home comes up for sale. It can also be less stressful knowing that if your offer is unsuccessful; you have time to wait for the next opportunity to come up. 

The downside to buying first is if you are unable to sell your home fast enough, you will find yourself owning two homes at once. The result is you could be paying two mortgages at the same time, not to mention all the other costs of home ownership. Before you make an offer on your new home and potentially find yourself in this situation, carefully weigh whether you’re financially able to pay for two homes at once.

As a buyer with an existing home to sell, you can protect yourself by adding a condition to any offer you make. In addition to the highly recommended conditions on financing and inspection, you can also make your offer conditional on the sale of your current home. That means if you’re unable to sell within a specified period of time, you’re able to back out of the transaction. However, it’s worth pointing out that this condition will likely make your offer less attractive to the seller because of the uncertainty for them.

SELLING FIRST

The biggest benefit of selling first, aside from removing the risk of owning two homes at once, is you’ll know how much money the sale brought in, which will help determine how much you can afford to pay for the next place. As helpful as that is to know, the challenge is that you’ll find yourself in a race against the clock, with your closing date impending. If you’re not careful, you may end up rushing the process and settling for a home that isn’t ideal for you, or paying more than you planned because you feel pressured.

HAVE A BACKUP PLAN

Regardless of whether you buy first or sell first, it’s a good idea to have a contingency plan in case your closing dates don’t align, leaving you with two homes, or no home, for a period of time. If the sale of your home closes first, you might consider a short-term rental or moving in with family or friends. If the purchase of your new home closes first, you might need bridge financing to cover the down payment and other closing costs until the sale of your current home closes.

As a Milton real estate agent, I have the knowledge and experience to help advise you which decisions is better suited to your circumstances. Contact me at 905-858-3434 or email at katherine@katherinebarnett.com.