You’re starting to outgrow your home and are beginning to consider the possibility of moving. The process of purchasing or selling a home involves saving for a downpayment, arranging finances, and handling the requirements of an inspection.
So what should you do: buy or sell your home first? The answer is largely dependent on the local market conditions of the area in which you live. The last thing you want is to be stuck with two mortgages or no place to live. By understanding the basics behind real estate principles, you will be able to make an educated decision when the time comes.
The Previous Norm
Typically, people first sell their current home before searching for a new one. Although this works in a moderately hot real estate market, doing so in an extremely competitive market is difficult. To understand this logic, it’s important to first comprehend the two types of real estate markets: A buyer’s market is one in which supply outweighs demand. There are many homes on the market, prices are lower, and a multiple offer scenario is rare. On the contrary, a seller’s market is characterized by a limited supply and an excess in demand. There are many house hunters, resulting in above-average sale prices and multiple offers.
With multiple offers and climbing prices, finding the home you want at the price you need may prove difficult. In a competitive market, chances are your home will sell quickly. With a slower real estate market, selling your home is more difficult. This dichotomy requires you to weigh the benefits and disadvantages of both approaches. When purchasing a new home first, you risk paying the mortgage on two properties at the same time in addition to maintaining two homes. If you decide to sell before purchasing another home, you could potentially end up selling your home before being able to find another and may need to live elsewhere for the time being.
Understand the Local Market
This is your best bet on making the decision to buy or sell first. You will need to have an in-depth understanding of the local conditions. Although you should definitely educate yourself, this is where the expertise of a real estate agent comes in. A qualified real estate agent is updated on the latest trends and conditions of your local market.
Consider a Seller’s Condition
If you’re still having second thoughts, you should consider adding a seller’s condition to the contract for your new or existing home. Essentially, this gives you more time to either purchase another home or make the purchase dependent on the sale of your own property.
Alternatively, you should also consider the possibility of rental revenue if you’re unable to sell your home right away and can afford to do so. This way you’re still achieving a financially advantageous situation without the pressure to sell. It’s also a great way to diversify your investment portfolio. Alternatively, you may have to sell one of your homes and obtain bridge financing.
If you’re looking to sell or purchase a property, trust Susan Macarz as your real estate expert in Toronto. With over 25 years of experience and a passion for sales and negotiation, she has the insights required to make the best property transition. Learn more about Susan’s services by calling 416-487-5131 or email her at [email protected].