Real Estate

Selling First or Buying?

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[OP]
Sr. Member
Jan 22, 2012
647 posts
259 upvotes
Bradford

Selling First or Buying?

I know it’s currently a sellers market (at least where I live).
We’re hoping to move to our final house but there currently isn’t one listed in our preferred neighbourhood.
When one does list, we want to be ready. Do we sell our current house first or wait til we buy?
Our financing though would need to be based on how much we make from our current house?
Looking for advice.
18 replies
Deal Addict
Feb 19, 2019
1773 posts
2715 upvotes
Stouffville ON
In a majority of cases I would say sell before you buy, but you need to assess your own situation, if the house you are buying is so unique that it rarely comes to the market, or your demands are very specific, and the house you are selling is common and in demand, you may want to consider buying first.
One glove doesn’t fit all.
Full Time and Full Service Realtor
Sr. Member
Nov 10, 2019
622 posts
609 upvotes
Buy first if you live in a high demand area with a high demand house.

Sell first if opposite to that.
Deal Addict
User avatar
Jan 2, 2012
4395 posts
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Toronto
Topher86 wrote: I know it’s currently a sellers market (at least where I live).
We’re hoping to move to our final house but there currently isn’t one listed in our preferred neighbourhood.
When one does list, we want to be ready. Do we sell our current house first or wait til we buy?
Our financing though would need to be based on how much we make from our current house?
Looking for advice.
We've always bought first, then listed. As long as you get a reasonable closing date (like up to 90 days), then you'll usually have ample time to list and get at least a firm offer on your current home. Can then get bridge financing if needed to cover any gap where you temporarily own both homes.

If you sell first, the clock starts ticking as to when you must buy your new home, and line up the dates to be able to move in time. There's a good chance you'll need to move somewhere temporarily and put all your furniture in storage, or end up buying a less than desirable home just because you're pressured with timing.

Lots depends on your unique situation like if it's a buyer or sellers market, if your current home will be easy to sell and within a certain price range, and how easy it will be to buy your new desired home. There's no right or wrong answer that fits all cases so talk to your realtor and hopefully they can guide you in the right direction.
Deal Expert
Feb 29, 2008
19072 posts
17400 upvotes
Tarrana & The Ri…
Why suggest buying first in today's volatile market? We could be shut down again in 2 weeks. Personally would sell first, then buy.
Deal Addict
Jul 3, 2007
4050 posts
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Toronto
Topher86 wrote: I know it’s currently a sellers market (at least where I live).
We’re hoping to move to our final house but there currently isn’t one listed in our preferred neighbourhood.
When one does list, we want to be ready. Do we sell our current house first or wait til we buy?
Our financing though would need to be based on how much we make from our current house?
Looking for advice.
90% of the time you sell first...
Deal Addict
User avatar
Jan 2, 2012
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Toronto
JayLove06 wrote: Why suggest buying first in today's volatile market? We could be shut down again in 2 weeks. Personally would sell first, then buy.
Nobody is suggesting that. What I suggested is to take a close look at the individual situation, and determine which option would be better.

Since OP said their area is currently a sellers market (meaning should be easy to sell your home), and that homes up for sale in their target neighborhood are rare (so could take a long time to find an ideal home and successfully buy it), buying first should be considered, weighing the pros and cons and their risk tolerance. As I said there is no right or wrong answer that will apply to all cases.
Deal Expert
Feb 29, 2008
19072 posts
17400 upvotes
Tarrana & The Ri…
rob444 wrote: Nobody is suggesting that. What I suggested is to take a close look at the individual situation, and determine which option would be better.

Since OP said their area is currently a sellers market (meaning should be easy to sell your home), and that homes up for sale in their target neighborhood are rare (so could take a long time to find an ideal home and successfully buy it), buying first should be considered, weighing the pros and cons and their risk tolerance. As I said there is no right or wrong answer that will apply to all cases.
I'd STILL sell first.
Deal Addict
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Jan 2, 2012
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Toronto
JayLove06 wrote: I'd STILL sell first.
As long as you had a place lined up to live for a few months if you couldn't finalize buying a new home in time, then that would be the much safer option. Many people though would like to avoid this situation at all costs.
[OP]
Sr. Member
Jan 22, 2012
647 posts
259 upvotes
Bradford
My concern with selling first is not having anywhere to move to. We don’t really have anywhere to go while we wait either.

Our house should sell pretty fast. “Should” since who knows if the market could change.
Deal Fanatic
Jul 30, 2003
6208 posts
990 upvotes
Toronto
You need to look at both sides of the coin and marry in all factors:

1 - You probably have a good idea of selling time for your house (and yes seller market right now). What price range are you in? Under mill / under 1.5m / over 2m. under mill will always be in demand in foreseeable future. Buy first in that case.

2 - Where are you buying? What are the chances of getting something in your range? (really tight market right now and over-bidding means missing out on a lot of limited options out there)

3 - Discuss with your agent, can you add a condition to extend closing by another 3 months (if needed).

4 - You can always rent temporarily, if you do sell first and have trouble finding a place. Its a hassle but a possibility. When I bought the property, I rented the place back to owner for 3 months. Paid up front. They only stayed little over a month (while looking for a place).

Its hard to give a concrete answer unless you know the specifics. Feel free to PM me if you want more info.
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Deal Addict
Nov 13, 2013
3784 posts
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Ottawa
JayLove06 wrote: Why suggest buying first in today's volatile market? We could be shut down again in 2 weeks. Personally would sell first, then buy.
This. If you sell first you could get pressured to buy, and you might need to rent something. The latter is worst case. On the other hand if there is any adverse economic event and in current environment this seems highly probably you really don't want to be left holding two homes. I have personally known so many people who have had this happen. Some have seen most of their equity vaporized. Many held both for years and ended up doing ok. If you are in a sellers market you can dictate terms a bit. Insist on a long closing and you will find someone who is month to month and will be happy to oblige or is in same situation and likes the long lead time.
Deal Addict
Dec 5, 2009
1760 posts
2061 upvotes
Depends on the market... you might not stand a chance if you have any subjects on your offer... that’s what is happening in Vancouver for detached homes under 1.5 right now.
[OP]
Sr. Member
Jan 22, 2012
647 posts
259 upvotes
Bradford
Yes. Much different times then when we bought this house. We were able to put a “sale of our home” condition on the house. Doubt that would fly in today’s market unless the house we were purchasing had minimal interest.

It is a sellers market for sure but some houses are sitting. Two houses side by side up the road, one has been on the market for 68 days and the one beside just listed and sold in a day. Both in the same price point. I wonder if a house on the market for a long time turns buyers off?
[OP]
Sr. Member
Jan 22, 2012
647 posts
259 upvotes
Bradford
Also, how does financing work if you’re using the sale of a house to make up the money?
We would use $500,000 from the sale of this house towards the new one.
Deal Guru
Feb 9, 2009
12368 posts
11266 upvotes
Most cases sell first so you know what much money you have to work with.

But sometimes a great home comes on the market maybe one home a year in a specific neighborhood you may need to buy first.

Main thing is go in with a financing condition to see if you could get bridge financing in case the closing of the home you buy is before the closing of the home you sell.

You also want to assess your homes value consistently so if this scenario happens you are kinda ready to go and can list your home upon approval of the home you bought.

You can typical get your home ready to go in days so don’t fear if you need to buy first but of course a small risk is like what happened in March when the market shuts down and you may be sitting on two homes for longer than you want...
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Jan 2, 2012
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Toronto
Sanyo wrote: Main thing is go in with a financing condition to see if you could get bridge financing in case the closing of the home you buy is before the closing of the home you sell.
The typical financing clause on a home purchase is to secure your mortgage, not to arrange bridge financing. Financing clause is usually only valid for around 1 week after the purchase/sale agreement is signed, after which it must be waived.

Bridge financing can only be secured after you have a firm (all conditions waived) sale of your home. which would probably take longer than the financing clause would allow. You need to ask the lender upfront when getting the mortgage approved if they offer bridge financing and what the process will be.

If you need the funds from home sale to fund your new purchase, you can put a clause in that the closing date can be extended X days, so many number of times, if you fail to sell your current home. Obviously a seller would only accept this clause if they were in more of a buyers market.
Deal Addict
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Jan 2, 2012
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Toronto
Topher86 wrote: Also, how does financing work if you’re using the sale of a house to make up the money?
We would use $500,000 from the sale of this house towards the new one.
When you are getting the mortgage approved for new home (either a port of current mortgage, port/increase to current, or brand new mortgage) you will estimate what you think the sale price will be on current home to calculate total down payment on new home. If you've already sold current home you will know the exact downpayment amount.

In many cases there will be some overlap between closing dates so you will temporarily own 2 homes. This is actually more convenient since you can move on your own schedule and don't have to worry about moving on same day you pick up keys, which can always face unexpected delays. As mentioned above as long as you have a firm sale (no conditions) of your current home, your lender should offer you bridge financing for the overlap time (typically a few weeks or worst case even a few months) to lend you the $500K down payment. The bridge loan is then discharged once current home sells.

Bridge loans are typically higher interest (I think 6% range or so) and have fees (I think in the $300-$500 range or so) to set-up and discharge. They are short term though so ultimately are a drop in the bucket compared to home transaction.
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Nov 10, 2018
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