Growing families often need a home that can grow with them. When considering a move, most people start with the question “should I buy first or sell first?”
“While there is no 'right' answer, it's important to know the potential pros and cons of both options,” says Joseph Richer, the registrar for the Real Estate Council of Ontario. “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.”
Without a closing date looming there is time to wait until the right home comes up for sale. The downside to buying first is evident when the original home can't be sold quickly enough and you own both homes at once. Paying two mortgages at the same time and managing the other costs of home ownership may be too much. Additionally, it may be difficult to secure a mortgage for the new home.
Buyers with an existing home to sell can protect themselves by making an offer conditional on the sale of their current home. That means if they're unable to sell within a specified period of time, they can back out of the transaction. However, this condition can likely make an offer less attractive to the seller in busier markets, or in times of multiple offers.
The biggest benefit of selling first is the knowledge of how much money the sale will bring in. This can help determine what is available to pay for the next home. The challenge is that with a closing date looming, and potentially no home to move into, families may be rushed and end up settling for a home that isn't ideal.
Have a contingency plan
If the original home sale closes first, it is smart to consider a short-term rental or moving in with family or friends. If the purchase of the new home closes first, it might be necessary to have “bridge financing” to cover the down payment and other closing costs.
“No matter which option a family chooses, it's important to remember that a registered real estate professional is knowledgeable about market conditions and will offer advice and solutions,” says Richer.
Families can learn more about real estate protection for buyers and sellers at www.reco.on.ca.
We can help
If you're not sure whether to buy a home first, or sell your current home first, we'd be happy to take a look at your current situation and give you advice. In many cases we can do both at the same time, download our Seller's Guide to learn more, or call us directly The Rainmaker Team 905-833-1030. Send Email