Should I Buy Or List First? – Part II
In part two of our three part series on Should I Buy Or List First?, we explore the pros and cons of buying your new home first, and then working under a fixed timeline to get your current home sold. In case you missed part one of our series here on selling your current home first before going ahead with your purchase, click here.
Strategy #2: Buy First, Sell Later
The “buy first, sell later” strategy definitely isn’t for the faint of heart, but when the stars are aligned and this strategy pans out, the benefits are great!
Typically, the types of individuals who opt for the buy first, sell later strategy are those who are interested in purchasing a new home that is so unique or so remarkably well-priced that it’s a true rarity to find on the market.
If you’re unsure just how unique the home you’re looking for is, your Realtor should be able to conduct a retrospective sales analysis for properties matching your search criteria in your target neighbourhood to see how regularly they come available. As a rough rule of thumb, if less than four listings matching your criteria come available within a calendar year, the property you’re looking for is probably unique.
While striking when the iron’s hot always has its allure, it’s important to also keep in mind the obvious downsides that come with this strategy. Namely, if you commit to purchasing a property and are unable to sell your current home on the schedule you had initially forecasted, you might be in a position where you hold title to two properties concurrently. Are you in a position where you would be able to shoulder two mortgages at the same time? Even if a lender was willing to extend that much capital to you, how much stress might a double mortgage payment every few weeks cause you? What impact might this stress have on other aspects of your life or your other financial goals?
There is always a component of luck when it comes to home sales. Despite the best efforts of your Realtor, even the most brilliantly marketed home offered at the most competitive price might not sell if the “right” purchasers aren’t out shopping the market. Of course, by reducing the list price of your current home further you might be able to stoke up some buyer demand, but no one likes having to sell their home at a loss—especially when the market is hot!
In short, if your finances are tight and you are even somewhat prone to worrying, the buy first, sell later strategy probably isn’t for you. However, if you have some extra capital on the sidelines and you are willing to shoulder the possible financial storm to land just the right new home, the pay offs from this approach can be great.
Read Should I Buy Or List First? – Part III 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.