Real Estate

How to transition between houses (re: closing dates)?

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  • Sep 3rd, 2015 9:49 am
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Deal Addict
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Jan 31, 2007
1519 posts
370 upvotes
Richmond Hill

How to transition between houses (re: closing dates)?

6 years ago, we sold our house and were forced to rent a condo because we couldn't find anything good to purchase, in time (we had placed an offer on one house, but it fell through after the inspector found extreme water damage, including a collapsed floor and rotted wall that wasn't repaired, but covered up). From the condo rental, we went to a (larger) condo purchase, but the lack of real AC and balcony caused extreme heat, forcing another move. This time, I didn't know how realistic it would be to put ourselves in that same position of selling first and then rushing to make offers, so I went to TD to inquire about a bridge loan, in case it took us a few months (i.e. much longer than the close date) to sell the condo. The lady said bridge loans are only meant to be very short-term and that I needed a mortgage; So I got a mortgage and bought a 2-story house (and listed/sold condo after moving out of it). 4 years later, elderly parent requires a single-level/bungalow, so I don't know what course of action I should take. I can't even afford a bungalow in my area, but I'm thinking of waiting until spring and moving because I simply don't have any time to buy/sell, right now. The upstairs doesn't get enough circulation when it's hot/cold outside and there are lots of squeaks, which I fear may cause a long sell period (DO I NEED TO DISCLOSE THIS, SINCE THIS HAS CAUSED ME ISSUES???). Should I buy first and be forced to accept lowball offers, or sell first and rush to buy the first bungalow I find? I'm also toying with the idea of renting a bungalow/condo (to have access to more cash for short-trading), but the mortgage is transferable and so I think I should just make another purchase (in a city where properties cost less), so that I don't get locked out of the RE market (as I was the first time that I rented and eventually had to settle for a major downgrade from original house). Are there even good condos that heat/cool properly that I should be considering, as my experiences have been negative...I only know of $1+mill condos that are extremely comfortable...and I have no where near that. Another option that I've been strongly considering is a retirement home for my elderly parent, which I feel is necessary at this point, but it would destroy her spirit (I don't know what I should do during this transitional period of parent to complete dependence). Thanks in advance and apologies for the long-winded post.

(before you leave a dumb comment/insult, please be aware that I've left out a lot of personal information that led to hasty decisions)
8 replies
Newbie
Aug 17, 2015
59 posts
14 upvotes
Toronto, ON
I think you should sell now while the market is good and if your house is priced correct you should not have an issue, and buy during the starting of winter where market is usually slower.
Newbie
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May 6, 2014
95 posts
5 upvotes
Seems like a lot of stuff going through your mind. I'm no expert, just telling you what I've been told by many people ... but always sell first and buy after (even if that means moving somewhere in between that isn't ideal).

Probably the least helpful response you'll get here :)
Deal Addict
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Jan 13, 2012
1110 posts
48 upvotes
Sudbury
Put your folks in an elderly home.

It'll clear your mind so you can make wise financial decisions.
Deal Addict
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Feb 1, 2009
3577 posts
2400 upvotes
Toronto
Good retirement homes usually have a long waitlist so start looking now if that is an option. If it will make your parents upset, then look into a cheaper smaller condo. Predevelopment condos are fairly affordable in North York and Scarborough depending on when you need them. I saw some Tridel condos with 500-600 sq. feet (1 bedroom) starting at around $245,000 ready in 2 years.
Deal Addict
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Jan 13, 2012
1110 posts
48 upvotes
Sudbury
I'll add, we bought our second house, and held on to the the first. While we are keeping it as a rental, the lack of stress trying to gut a home of possessions within a day makes it a no-brainer in my eyes.
Deal Addict
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Jul 25, 2008
1132 posts
507 upvotes
GTA
We just sold our condo, with a closing date of Sept 25, but closing date for the house we're moving into is Oct 14. My father in-law just passed away, so we will be moving our belongings into his condo there for 2 weeks. We don't feel comfortable staying there though, so we'll be renting at Staybridge Suites for $1500 for the gap in between. They allow pets which we need, have a nice kitchenette and free breakfast and social bbqs, meals from Tues-Thurs. We're not getting a morgtage, but a HELOC for like 2 months instead of a bridge loan.
Deal Addict
Mar 24, 2015
1044 posts
412 upvotes
Ottawa, ON
Here's what we did:
We wanted to buy first then sell because like you we didn't want to be forced to rent or buy a house we didn't really like. We started looking at a particular neighbourhood and found a detached we like and it's been on the market for more than a year already and priced had dropped (the houses in this particular neighbourgood stays on the market for quite a long time because they are over $550k). The closing date on the house was very close, enough to make us worry what if we put an offer and it's accepted, we would only have a few weeks to sell our semi, in a slow market. So we decided to sell our semi first and hoped the house would still be on the market. If the house had sold, then we would have removed our semi from the market. But we didn't want to go there so we priced it right, painted, staged, decluttered, cleaned, scrubbed. We used an agent because we didn't want to risk Grapevine. Honestly, I would have listed like the other semis on the street and would probably have been sitting on the market for months. Our agent suggested a price, which we upped by $5k, and it was still $10k-$15k less than the other semis. We sold in 2 days. Then we put in an offer on the detached and it was accepted. We bridged for 1 month and it was a smooth, stress-free move for us, especially with 2 small kids.

Of course our situation is probably unique, but you could try first looking at bungalows, see if you like one or two and try to get a bit of background info on them from your agent for e.g how long on market, etc...
Then put your house on the market at the right price. If potential buyers find problem, be ready to fix it quick. Our buyers had a problem with a door frame and we signed a paper saying that we agree to change it before closing date.

If the detached had failed inspection, then we would have kept looking and rented if needed be. Of course it's not ideal to rent, but I find it's more stressful not to be able to sell a house than renting. You can definitely make the renting process easier. We moved a LOT of stuff into a Dymon storage when we staged our house, we packed like we were ready to move and moved the boxes into the storage unit. It made the moving process a lot easier when time came. If you find yourself renting again, you could leave your excess stuff in the storage until you move into the bungalow you buy.

So my advice is to sell first. Besides, once you sell, you'll have a clearer idea on your finance. Also, I found using the same agent for buying and selling helped tremendously because he knew our situation, that we already have an idea on the house we wanted to buy and wanted to sell quick. We were also able to negotiate on the commission.

Which do you find more stressful, going through the rental process again or not being able to sell after you bought a house? If you buy first, you might get lowball offers but you might also not get any offer at all.
Deal Addict
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Jan 2, 2012
3941 posts
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Toronto
There is no right answer on if you should buy first or sell first, as each situation is unique.

If you sell first then you will be forced to rush into a new home purchase and may end up getting a home that's not ideal for you, or overpaying for one. If you don't rush the home purchase and your current home is sold, you may then end up needing to rent a place temporarily or moving in with relatives, which means you will be breaking your current mortgage and needing to pay cancellation fees. Not to mention hassle of moving multiple times and possibly requiring storage for all your stuff.

If you buy first and need the mortgage ported then you will need to sell your current home asap. As long as you get a firm offer on the current home, that's all you need to get bridge financing from the bank for the possible time you will own 2 homes. What is ideal if you sell first, is if you can qualify for a 2nd mortgage on new home independent of the 1st home/mortgage. Then even if it takes a while to sell, you will be ok still to close on the new home (except for the fact you'll be paying 2 mortgages and will need to pay cancellation fees on eventually on first mortgage).

Huge risk in buying first and requiring porting of your mortgage, is that if you can't sell current home in time you don't get bridge financing and you may be forced to back out of the new home purchase leading to possible loss of deposit plus any other costs if that owner sues you.

So really if you intend to buy/sell first, it all comes down to how well you know the market. If selling first do you feel there's enough inventory out there to choose and buy a home within a few months? If buying first are you confident in the demand that you can get a quick sale on your current home?

In my case, I bought first even though I required my mortgage to be ported, just because in Toronto it's not always easily to find an ideal home and then actually buy it without a crazy bidding war. And the home I was selling was a generic 1-br condo in a high turnover area, so I was confident I could sell relatively quickly at market price. So we bought the new home, then put condo up for sale and luckily got a firm offer in plenty of time to get bridge financing and port the mortgage over to new home. So for me buying first was the ideal way to go.

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