The dilemma as old as homeownership – whether to buy a new home first or sell current property before purchasing another. This decision can be a complex one, influenced by various factors such as type of properties, market conditions, financial considerations, and personal preferences. There’s no one-size-fits-all answer, as each situation is unique. Let’s delve into the pros and cons of both scenarios to help you make an informed decision.
BUYING FIRST
Pros:
- No Rush: Buying a new home before selling your current property allows you to take your time in finding the perfect home without feeling pressured to make a quick decision.
- Smooth Transition: If a longer closing time is negotiated, you can seamlessly transition from your old home to the new one without the hassle of temporary accommodations or moving twice. This can be particularly beneficial for families with children or those with busy schedules.
- Avoid Market Fluctuations: If you anticipate prices rising in the market, buying first can lock in a favourable purchase price before prices escalate
Cons:
- Financial Strain: If your current home won’t sell in time for closing of the new one, carrying two mortgages simultaneously can strain your finances. This can lead to increased stress and financial risk.
- Conditional Offers: Be prepared that sellers will be hesitant to accept an offer conditional on the sale of your current home which will limit your buying options. You will likely need to purchase without this condition, taking a risk that your current home will sell before you close on the new one.
- Market Uncertainty: If the market experiences a downturn or your home takes longer to sell than anticipated, you may find yourself in a precarious financial situation.
SELLING FIRST
Pros:
- Financial Security: Selling your current home before buying a new one ensures you know exactly how much you can afford to spend on your next property. This eliminates the risk of carrying two mortgages and provides financial security.
- Negotiating Power: Without the pressure to sell because you had already purchased, you may have more negotiating power when it comes to both selling price and closing timelines. Buyers may be more inclined to make competitive offers to secure your property.
- Clear Path Forward: With your current home sold, you can confidently move forward with your home search knowing you have a firm timeline in place. This can streamline the buying process and reduce uncertainty.
Cons:
- Temporary Housing: Selling your home before buying a new one may require temporary accommodations such as renting or staying with family/friends, if the timelines for your purchase do not align. This additional move can be inconvenient and costly.
- Limited Options: Without a new home secured, you may feel pressured to settle for a property that isn’t ideal or face the possibility of being unable to find a suitable home within your desired timeframe.
- Market Changes: In a competitive market, there’s always the risk of missing out on your dream home if you haven’t yet sold your current property. Timing is crucial, and market conditions can change rapidly.
Ultimately, the decision to buy or sell first depends on your individual circumstances, risk tolerance, and market conditions. It’s essential to weigh the pros and cons carefully. In addition, decision will depend on the market information such as what is the average time it takes for similar properties to sell, and how much choice there is in types of properties you intent to buy next.
Whether you choose to buy first for flexibility or sell first for financial security, remember that there’s no right or wrong answer—only what works best for you.
If you know of anyone who is facing this dilemma, let me know and I’ll be happy to provide them with the market research tools that will help them with this decision.