Should you buy or sell first?
Some of the many reasons for wanting to move include: downsizing; family growing; and, relocating.
The key to your decision on whether you should sell or buy first is planning ahead and we’ll help you explore your options.
For those that don’t have the financial ability to temporarily carry two properties, the options will be limited.
Option #1 Buy first with interim or bridge financing
Getting into an accepted offer on a new home without a subject-to-sale clause can be very costly and is not recommended unless you have made the necessary financing arrangements for the interim.
Arranging temporary funds will allow a seller with an unsold home to proceed with a purchase. This means that they will have the flexibility to move over the period of time between the possession dates of both properties, which can also be used for renovations.
The most important consideration here is that the seller must have a home that is marketable and being reasonably marketed, otherwise carrying two properties could start to get very expensive, especially if the market declines.
Occasionally a short possession date for a new home can be negotiated on behalf of a seller to reduce or eliminate the need for temporary financing.
Option #2 Sell first
Obviously the safest choice but it can also be the most rigorous. Inevitably it means an interim accommodation will be required, and perhaps two moves. This is often the case when someone is relocating and staying in temporary accommodation with their personal belongings in storage.
Focusing on selling your existing property first is often the best strategy in order to maximize your return. With cash in hand it also qualifies you in the eyes of a seller as a serious buyer, and could, depending on timing and local market conditions, strengthen your negotiating position.
If a buyer really wants your property you might even get away with a provisional rental agreement, or a contingency clause allowing you time to buy your next home, although this doesn’t happen very often.
Option #3 Subject to sale clause
In some markets choosing to write an offer with a subject to sale clause will work, but from experience in the Metro Vancouver area, it seems sellers are less open to accommodate this option.
It also requires a solid offer and probably very close to the asking price, which can limit your ability to negotiate.
Trying to match the dates exactly to accommodate both parties can also be challenging.
This balancing act is not for the faint of heart, and one of the many reasons why you should allow a REALTOR® to share some of his or her expertise.