Should I Buy Or List First? – Part I
One question I routinely receive from homeowners who are looking to both sell their existing home and purchase a new home simultaneously is: Where do I begin?
That is to say, these homeowners are seeking direction as to whether they would be better off to first find a new home that matches their search criteria before placing their existing home on the market for sale, or if they should sell their current home and have the cash from that sale in hand before the begin their search for their next home.
While there is perhaps no one universal answer to this question, in this three part series we will explore the pros and cons of:
1. Selling your current home first, and then starting your new home search;
2. Buying your new home first, and then working under a fixed timeline to get your current home sold, and;
3. Drafting a conditional offer on a new property that’s contingent on you selling your current home by a certain date. In this scenario, if you are unable or unwilling to sell your current home by a certain date, you are no longer compelled to complete your purchase.
While drafting a conditional offer appears on first blush to be the most preferred option, as we will see, this strategy (much like the other two) also comes with its fair share of shortcomings.
Strategy #1: Sell First, Buy Later
For many homeowners, the “sell first, buy later” strategy is the preferred option.
The beauty of this strategy lies in the fact that by selling your home first, you will have a firm sense of exactly how much cash you will have in hand before you even begin your subsequent purchase. If you are the sort of person who is vigilant about living within your means, this strategy will suit you well. By having a firm sense of your affordability from the moment you start your house hunt, you will be able to quickly sift through prospective homes as either being within your means or not, and have a firm basis for your negotiations with sellers. This confidence in your tactics will allow you to outcompete many other prospective purchasers who are less sure about their financial position and vastly increase your chances of having your bids be successful.
Depending on market activity and your own personal motivations, you might be inclined to come forward with an unconditional offer on your new home. In certain segments of our housing market sales figures have been so strong that, homeowners will now only entertain conditional offers. By having cash in hand from your previous home sale you will be in a position to compete with developers, investors, and other parties who have no qualms about coming forward with unconditional offers.
While generally the “sell first, buy later” strategy seems quite appealing, where it falls short is if you have not found your next home by the time you’re required to vacate your current property, you might have to seek temporary accommodation. Generally speaking, homeowners in the Vancouver market have between one and three months between the time of contract signing and the new owners taking possession of their home, which is sufficient for most folks to sleuth out their next home—provided that they have a clear understanding of their buying power and overall housing stock availability.
Read Should I Buy Or List First? – Part II now!
If you have questions about the market or would like to discuss anything mentioned in this article, feel free to send me an email or drop me a line—I’d love to chat. I’m a Vancouver Realtor who is an expert in residential real estate and sell extensively condominiums, townhomes and detached homes.