Selling your home will likely be one of the most difficult decisions you’ll ever make. Whatever your reason, be it downsizing or upgrading to a larger home, one of the first questions you will probably be asking yourself is: Should I sell first or buy first?
Selling First
The obvious advantage to selling first is that you have the security of knowing your home has, quite simply, sold. There will therefore be no necessity for a clause in your purchase agreement to void the sale in the event that your home doesn’t sell in a set period of time. Not only does this usually give you a little more buying power (since you can firm up your deal sooner), but it makes the current owners of your new home recognize that your offer to purchase is a serious one. They feel secure, you feel secure.
New Home
Another reason to consider selling your home before purchasing may be cost. If you intend to establish yourself in a brand new home, either in a development or by a private builder, you will need to expect a sizeable deposit due near immediately. These can range in the realm of 10 to 20 percent of the total purchase price. This is a sizeable amount of money when you consider that the average two-story home in Canada in 2008 costs $399,738. Many folks just don’t have that kind of money sitting around to be invested in property. They will need to borrow it from a lender if they do not have liquid assets.
Renting
One of the downsides to selling first is closing dates. If you cannot orchestrate your moving dates to closely match, you may well be forced to rent a home and/or some sort of storage facility for your belongings. This can be a major upheaval in a family’s life. While renting, you probably won’t want to unpack everything because you know you will be moving into your own home relatively soon. So, you wind up feeling for a while that you don’t have a home.
The Right House
Again, with selling first, finding the right house for you may not be a quick process. It depends on trends in the market, your personal taste, your needs, and what you are willing to compromise on. If you are not giving a lot of room for compromise, you are likely lengthening the time it will take you to find your home.
Buying First
The biggest problems here are the stress and worry of wondering if your home will sell. A mistake many people who choose to buy first make is not having their current home sell-worthy. This means that there were repairs to be made (not necessarily large ones), rooms should have been painted, and decluttering should already have taken place. You are probably not going to be able to sell your home for the same price you might have had you shown it after doing these things. With the common real estate knowledge that only one in three houses listed sell, the best defense, then, is to finish these projects before looking at homes to buy.
Advantages in Buying First
You have some advantages in buying first over selling first also. You know you are getting the house you want. You have shopped around and found your dream setting. It will be a worry from your mind that you already know where you are going before you leave home. It can also be a key motivator in not only your moving scenario, but in other areas of your life as well. Planning out appliances and window coverings ahead of time can also give you the freedom to not have as much last minute worrying.
For most people, the biggest advantage is the money from your current home can go from your lawyer, directly into your new home as a downpayment. This is often a big relief for those who are on a tighter budget and like to know exactly what they are buying ahead of time. You get to plan the closing date for the selling of your current home around your needs of the closing date on your new home. This means that despite not having sold your home first, you can bridge finance between the closing of one property, to the closing of the other.
Heather Allan - From the age of ten, Heather Allan knew writing was her forte. Her first major creative writing assignment in the fifth grade sparked her ...
