Selling Before Buying lets you set Your Price....
but Starts the Countdown to Closing Date
What are the pros and cons of selling before buying?
The ideal situation for most consumers in this situation is to buy and sell simultaneously, so the closing dates align and you have only one moving day. Unfortunately, that isn’t always possible.
I strongly advise you to think carefully about your needs, financial status, and tolerance for risk, and ask your real estate salesperson for advice.
As I mentioned last week, the big advantage of buying first is that you can take your time finding a home that’s right for you. The disadvantages are financial in nature: you’ll have to obtain the money to put down a deposit and absorb the cost of bridge financing, if necessary. You could find yourself in the unenviable situation of paying the expenses — including financing costs, insurance, and utilities — to maintain two properties for an unknown period.
When you sell first, you can set a sale price that meets your needs and you’re under a lot less pressure to accept the first offer that comes your way. And after you have sold your home, you’ll have a better idea of what you can afford to buy.
The drawback to selling first, however, is that as soon as you accept the buyer’s offer, the clock will start ticking towards the closing date. You will need to find a new home fairly soon, which might be a problem if you’re highly selective about the location or the type of housing you wish to purchase. You may feel pressured to make an offer on a home that doesn’t exactly fit your lifestyle or to look at rental units for temporary housing, which would mean moving your furniture and personal belongings twice.
Your sales rep may be able to give you a good idea of how long it might take you to sell your home and for how much money, and to let you know if it will be easy or relatively difficult to find a suitable property. They could also try to negotiate a longer closing date with the buyer’s representative.
And regardless of whether you’re buying or selling first, you should formulate a backup plan if problems emerge: do you have friends or relatives who could lend you money, or provide you with accommodations while you wait for a transaction to close? It’s always nice to know how to handle a worst-case scenario.
StarMetroToronto – Joe Richer Real Estate Council of Ontario June 2018
Please feel free to contact me regarding this article or about any real estate needs or questions that you may have. Call me at 416-804-0991 (client line) or 416-441-2888 ext 266 (office) or email for more information.