This post has been adapted and updated from one originally posted in 2020
When you buy your first home, you've probably been renting up to that point. So you sign the paperwork, make your deposit, give your notice, and start packing. Sure it's nerve-wracking. And in a seller's market, it can be pricey. But if you've outgrown that home, or you're ready to downsize, it's a whole new ballgame. Now you need to decide when to list, and when to buy. What if you sell your home, and then can't find one you like? Or conversely, what if you buy a home, and then can't sell yours?
I've done it both ways, and I'm here to tell you there is no right answer. However there are some things to know that may make your choice of what to do, easier:
Is it a buyer's or a seller's market? In a buyer's market, houses sell more slowly. So you may want to consider selling first, so you don't end up having to carry two mortgages. If it's a seller's market, that means houses are turning over quickly and you'll likely be involved in multiple offer situations. You may want to hang on to your current home until you've had an offer accepted on your next one. Right now it's a seller's market here in Ontario, so depending on your situation, this may be your smartest option. (Let's chat if you're thinking about this).
Evaluate your options if you need to carry two homes. Make sure you discuss the situation with your lender or mortgage broker in advance. Bridge financing may be possible, depending on your situation. This will allow you to carry the two properties on a temporary basis. Lenders do tend to be more open to bridging if you have clear offers whose closing dates don't quite align.
Give yourself the gift of time, and choose your closing date wisely. Giving yourself a long closing allows you more time to make up whichever end of the deal will be more challenging. It's rarely a balanced market, so this strategy is always good to consider. And if you're combining households, either blending a family or starting a new relationship, and you have multiple properties to sell before you take possession, a long closing will be essential.
Do your research in advance. Look carefully at the neighbourhoods where you want to move. Involve your REALTOR® in your search sooner, rather than later. It's what we're here for! We'll ask questions you haven't even thought of yet. Know what homes are selling for, how fast, and whether all the amenities you need are in close proximity. We can put together a marketing plan for your current home that takes market conditions into account. And we can help you with that all-important advance research for your next house, townhouse, or condo. In a hot seller's market, you'll find that nearly everything is selling "over asking" - so don't make assumptions about what you can afford without careful research.
Set your decision criteria. "I'll know it when I see it" is hope, not strategy. For what is probably your largest investment decision, knowing exactly what are the deal-makers and deal-breakers will streamline the process for you. Every house purchase involves a certain amount of stress; doing this will make sure you don't take on more than is necessary.
Know what you can afford, and stick to it. Pushing yourself by a few thousand dollars is one thing, but stretching ot a mortgage payment that a lender says you can afford, when you know it's going to make you uncomfortable every single month, is never worth it, and can make your dream home seem not-so-dreamy in very short order. This can be especially difficult in markets like our current one, where "over asking" seems to be the only price a seller will accept. Don't let emotions rule the day.
Make sure your expectations are realistic. Yes, it's possible that a fire-sale price will come up in a neighbourhood you only wish you could afford. But it's rare - and if you're looking for that treasure, guaranteed others are as well. So set your sights on a goal that's achievable, and you'll have less trouble getting everything to line up the way you've hoped.
So, as you can see, whether you buy first or sell first is up to you and your own comfort. But if you plan it right, do your research, and leave yourself plenty of time, you can do it, and your REALTOR® can be a big part of making it happen.
If you're thinking of selling, message me today to find out what your property is really worth. Then I'll propose a strategy based on your specific situation, and you can decide what works best for you.