It may be the ultimate catch 22 – do you buy a new home first then sell your current property or sell first then search for a new one? Each approach has its pros and cons so what’s best for you?
Traditionally, homeowners prefer to sell first but in hot markets where bidding wars and multiple offers are more common, some are willing to buy their dream home first, anticipating their current one will sell quickly.
Here’s a rundown of your options:
Pros to selling first
•You know exactly what your budget for a new property is and can hone in on homes priced right in your neighbourhood.
•You’re able to make a firm offer on a new home with a closing date that works for you.
Cons to selling first
•The clock begins ticking and you need to find and close on a new home before the closing date for your sold home – forcing you to potentially compromise on the kind of home you buy or the neighbourhood you and your family want to live in.
•If you don’t find a new home in time, you’re faced with the unlikely scenario of negotiating to extend the closing date on your sold property, or finding a short-term rental to live in while you continue your search.
Pros to buying first
•You only buy the house you love if and when you find it – you’re under no pressure to settle because time is running out on a sold property’s closing.
Cons to buying first
•You may have to finance two homes if selling your current one takes longer than expected.
•You could have to sell your current home for less to avoid losing a sale – that might require a larger down payment or an increase on your new property’s mortgage.
More tips to help you decide
1.If you can carry two properties temporarily with little or no bridge financing, buy the home you love first.
2.Closing dates can be a sticking point for buyers and sellers, but if finding a new home or selling your old one is a concern, try negotiating a long closing date – like three months or more.