Home Transition – Sales First or Buy First

Home Transition – Sales First or Buy First

Deciding whether to sell your current home before buying a new one, or vice versa, is a significant dilemma for many homeowners. Each option has its merits and drawbacks, and the best choice often depends on individual circumstances, market conditions, and financial readiness.

Buying First: The Ideal Scenario

Buying a new home before selling your current one can offer several advantages, but there are critical factors to consider:

  1. Certainty of a Next Home: One of the key benefits of buying first is the assurance that you have a place to move into. This can alleviate some stress after your current home is sold, especially when you don’t know where to go next.
  2. Limited Availability of Properties: In a seller's market, even with sufficient funds, there’s no guarantee that you can secure the right property. High demand often leads to competitive bidding, making desirable homes sell quickly and at higher prices. Nevertheless, even in a buyer's market, there can still be limited options for buyers in Markham communities. Therefore, buying first may be a reasonable strategy to ensure you find a suitable home.
  3. Risk of Financial Strain: If you choose to buy first, it’s crucial to ensure that you have enough financial resources to handle the transaction. Without proper financial backup, you may find yourself unable to close on the next property if your current home does not sell in time.
  4. Avoiding Hasty Decisions: While buying first gives you the assurance of your next living place, the pressure to sell your current property can quickly mount, especially as the closing date on your new purchase approaches. This situation can lead to rushed decisions, such as unplanned price reductions on your current home, which might not align with your financial goals.

Selling First: A Practical Approach

Selling your current home before buying a new one can often be the more practical strategy, especially in a buyer's market. Here are its benefits:

  1. More Time to Sell: Selling first allows you to take more time to prepare your house for sale, potentially leading to a higher sale price. You can stage and show your home without the burden of financial strain.
  2. Temporary Disruption: However, selling first can lead to temporary disruptions in your daily life as you still live in the property while preparing for staging and entertaining buyer showings. Additionally, there’s the risk of not having a place to live after selling, which may require considering short-term rentals or finding temporary accommodations while you search for a new home.
  3. Market Conditions Matter: Market conditions are a key determining factor in deciding whether to buy or sell first. In a seller's market, your home may sell quickly, but finding the right property afterward could be challenging. Conversely, in a buyer's market, you may have more options for purchasing but might face slower sales on your current home. Since the market can change rapidly, it's crucial to work with a professional Markham real estate agent who understands the local dynamics.

Real-World Example:

Recently, I assisted a homeowner with a small condo in downtown Toronto who was considering whether to buy first or sell first while looking to upgrade to a larger house in Markham. After discussing her situation in detail, I recommended that she sell her condo first. Here’s why:

  • Current Market Conditions: The real estate market in the GTA is experiencing a slowdown. By selling now, she could secure initial funding and enhance her position when looking for a larger property.
  • Pricing Strategy: A correctly priced and well-prepared condo can still attract the right buyers. Selling now and understanding how much more she will require for the upgrade would help her move forward with more confidence.
  • Stronger Negotiation Position: Once she sold her condo, she would have cash in hand, strengthening her negotiating power for the larger house she wishes to purchase.

The Risks of Waiting

For this homeowner, waiting for a market recovery could be a costly mistake:

  • Potential Market Fluctuations: While it’s true that her condo might appreciate by 5%, the same percentage increase in the larger house she intends to buy will result in a much larger dollar amount. For example, a 5% increase in the value of her condo might equate to a $20,000 gain, whereas a 5% increase in the larger house could represent a $100,000 gain. If both properties appreciate simultaneously, the larger house's increase in value could diminish her overall purchasing power, as the gap in value becomes more pronounced.
  • Opportunity Cost: Delaying the sale means missing the opportunity to upgrade sooner, which could impact her quality of life or affect her children's schooling.

Conclusion: The Right Choice for You

Ultimately, the decision to sell first or buy first depends on your unique situation, financial health, and market conditions. For homeowners looking to upgrade or downsize, closely monitoring market conditions is critical.

Every situation is unique, and homeowners should carefully evaluate their circumstances, market trends, and financial readiness when making this important decision. Consulting with a knowledgeable Markham real estate agent can provide valuable insights tailored to individual needs, ultimately leading to a smoother transition to a new home.



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