Often, clients come to me with the intention of selling their home and subsequently, purchasing a new one.
Whether they’re downsizing, upsizing, changing locations or simply opting for a change, it’s important to time correctly, think of the next step as you check off the to dos and hire a competent agent who knows and understands your circumstances.
One question we get fairly often; “do I wait until I have an offer on my home or at least wait until it’s conditionally sold, to look at homes that I may want to purchase?” The answer to questions of this nature depend entirely on the sellers and their timelines. Are you under a specific time crunch or can you afford the extra waiting time?
While naturally there are positives and negatives to both options, here’s why it’s important to at least conditionally sell before shopping and offering on another home.
Benefit 1: Pending the Sale of Buyers Home clause
Once you find a home you love and write an offer, there are conditions that are meant to benefit both the seller and the buyer. If your home isn’t listed or hasn’t sold yet, there’s a special clause stating ‘pending the sale of the buyers home’ which protects the buyers. In case their home doesn’t sell, there is an ‘out’. Now, while this clause is meant to benefit the buyers, it may not be a desirable inclusion for the seller, especially in a competitive market. Depending on the product, the sale of another property may not be as quick and swift as you might hope. Often times, sellers will in turn, ensure they have a clause to protect them, in case they receive a better offer in the interim. This may not be the best situation for you, the buyer, if you have fallen in love with the home. It leaves a bit of uncertainty and offsets your position in the transaction.
Benefit 2: Desirable Buyer if home is already sold
If you have already sold and start your home buying journey, you shop with confidence. There is nothing holding you back and you can make your next purchase with the ease in knowing your old one is sold and off the market. Plus, an offer without any pending the sale clauses is always a more desirable one to a seller. Sure, this may be a stressful time in a sense, what if you don’t find a home in time? But, in the buyers market we’re in, with elevated inventory levels and eager sellers, this extra urgency to find a home allows you to look at homes with a discerning eye. What is truly important and what is merely desired? What features are you willing to overlook in a new home, while which are deal breakers? When less is on the line, you can thoughtfully answer these questions without the added stress and uncertainty of your current home selling or not.
Benefit 3: Avoid Carrying 2 Mortgages
The main downside of buying a home before selling are financial; are you able to potentially own 2 homes at once and pay 2 mortgages at the same time? For some, the stress of this is enough for them to wait to purchase, but if your need to buy is greater than the stress, there are options that you mortgage advisor can advise. A disadvantage associated with high risk financing is that interest can be more costly than conventional financing, and the terms and conditions may vary according to case. The other downside is that since it’s high risk, as there isn’t a guarantee your current home will sell during the duration of the loan, you pay premium. It’s important to speak with a mortgage specialist to understand your options here. We can help guide this process!
While the above benefits certainly speak for themselves, there is a potential risk in losing out on your ‘dream home’ if you have to wait for your current home to sell. With banks offering bridge loans and with the potential to rent your home in case it doesn’t sell, there are many options for home owners because no situation is the same. Generally speaking, there is less risk in selling your current home before buying another, but sometimes, it isn’t that black and white.
Ultimately, you need to assess your situation early and hire a realtor you connect with and can speak candidly to. We’re here to help and would love to answer any of your questions. Get in touch today for all your real estate needs:
📱: (403) 404 0300⠀⠀