Should you buy or sell first?
Buying or selling first is a personal decision
Are you thinking about moving into a bigger home or a different neighbourhood? Should you sell your current home before you buy your next or buy first, then sell your existing one?
Aside from your personality and what risks you’re comfortable with when facing the dilemma of buying-first/selling-first, don’t forget to consider market conditions.
Sell first in a buyer’s market
In a buyer’s market, there’s a surplus of housing; prices are falling and there are fewer buyers. In this market, it makes sense to sell first.
The advantage of selling first is that you lock in the amount you’ll receive for your current home before the market falls further. You’re able to take advantage of further falling prices when you subsequently buy.
The disadvantage of selling first is that you haven’t yet found a new home and may settle for something that isn’t quite what you want.
One way of hedging your bet is to make your offer to buy, conditional on selling your current home. With a “conditional-on-sale” offer, the offer becomes firm and binding only if you sign an offer to sell your existing home within a specified period, usually 30-60 days.
Tips for selling in a buyer’s market:
- Consider hiring a home stager to highlight certain features of your home
- Be flexible with your terms and be open to negotiations
- Consider every offer (they may not come often)
- Be patient
Buy first in a seller’s market
In a seller’s market, there’s a shortage of housing; prices are rising, and there are more buyers. In this market, it makes sense to buy first.
The advantage of buying first is that if prices are going up, it’s preferable to lock in the cost of the home you want to buy. Meanwhile, allowing you to sell your home at a higher price subsequently.
When you buy first, you can take the time to look for the perfect home without adding pressure to sell your current home first.
The disadvantage of buying first is that since you haven’t sold your current house yet, you may end up owning two homes and paying off two mortgages at once.
Tips for buying in a seller’s market:
- Get pre-approved for a mortgage
- Act fast when you come across a home you love
- Make an attractive offer
- Add a personal touch by appealing to the seller with a letter
Knowing whether it’s a buyer’s or seller’s market isn’t always straightforward. It can depend on several factors, and the market can change quite quickly.
The right real estate agent can help determine what the market conditions are in your area and in the area in which you’re looking to buy.