If you’re looking to buy a new home but already own one (buying before selling), you have to ask yourself an important question: should I sell my current house first or buy the new one? It’s a common dilemma that many people face. Your family may have grown, you might be moving for a new job, or maybe you just found your dream home while browsing Chilliwack real estate listings. Whatever your circumstances are, we’ve outlined some pros and cons of buying before selling below to help make your decision easier!
The best-case scenario would be to sell your property or, at the very least, have a pending offer before buying another one so that you don’t end up with two mortgage payments. However, in today’s more changeable house markets, buyers have alternatives, like financial assistance options.
As a real estate agent and REALTOR® in Chilliwack, British Columbia, we discovered some pros and cons of buying before selling your current home. According to them, buying first has some benefits- such as being selective with your next purchase or feeling secure that your next house is already lined up. However, you must choose your next purchase carefully while feeling confident that you have another house lined up.
When you’re shopping for a house, you have to estimate your budget and be willing to compromise on your sale price if you want to sell your current property quickly.
You might need bridge financing or to pay out of pocket if your house doesn’t sell and you have two properties for a while or if your home sells for less than expected.
Why Would People Buy Before Selling Their House?
When people buy before selling their old one, they can be specific about what they want and have the luxury of finding the perfect fit without feeling pressured to compromise due to timelines.
Having a place to live between selling their old home and buying a new one is often a top priority for these clients, so they feel more secure when they know they won’t end up homeless during that time.
In a seller’s market, it may be beneficial to buy first as you will more likely than not sell your property quicker. The same goes for a buyer’s market when there is a “Subject to Sale” clause in the offer.
What Factors Should You Take Into Account When Buying Before Selling?
House Market Conditions
Because market conditions are always in flux, it’s important to consult with a real estate agent before making any decisions regarding buying before selling your old home.
If you buy first, you can relax and take your time to find the perfect home without worrying about running out of time. In a buyer’s market, there are plenty of homes, which means buyers have more choices—but also that homes spend more days on the market until they sell. That could mean selling your current home takes longer than expected or for less money, making it tough to afford your new dream home.
The risk of ending up owning two houses is the biggest concern for homeowners. However, a lot of it depends on your personality type and how much risk you’re willing to take. The number one consideration when deciding whether to buy or sell first should be market conditions. They can shift quickly, so always consult with your Chilliwack REALTOR® to learn about the market in both communities—the one you’re selling in and the one where you’ll be buying.
Mortgages
In order to fund the purchase of your new home, it is helpful to know the exact sale price of your current property. In a fluctuating market, one month’s evaluation of your home could be vastly different from what you end up selling it for. This could result in you not qualifying for a mortgage and being stuck with additional closing costs. While bridge financing does let you have a mortgage on two properties at the same time, it isn’t always an alternative.
Before looking for a new home, connecting with a trusted mortgage professional is important. This is something that any experienced REALTOR®s in Chilliwack would advise.
Conditions On Your House Offer
If you are buying before selling your current house, your REALTOR® will probably suggest adding a “Subject to Sale” clause to your offer. This means the sale isn’t definite until you sell your current property—or take away the Subject. However, these can also create more risk in a seller’s market.
Offers with a ‘Subject to Sale’ are more likely accepted by sellers. Within those types of offers, there is typically additional language present, such as ‘at any time,’ or ‘upon receipt of another acceptable offer for the property.’ This means that the seller has the right to end the contract if they give written notice to the buyer requiring them to waive their ‘Subject to Sale’ rights within a certain amount of time.
This allows the seller to accept an offer from the buyer with a ‘Subject to Sale’ clause, which means that the buyer promises to make an effort to sell their home as soon as possible. If another potential offer comes in and the original buyers are not able or willing to waive subjects, then they still have a chance to consider it.
Lifestyle
Some buyers might choose to buy their new property first if they are more worried about finding the perfect place rather than getting the best sale price for their old home. On the other hand, sellers who would get more money from selling their current house or having a place to stay while they look for their new one might choose to sell first.
Homeowners with the means to afford two mortgage payments at once might take on the risk of holding both properties should their current home not sell immediately. Young families or those with school-aged children are less likely to be in a position where they could end up without any homes and have to relocate in between.
How Can A Real Estate Agent Help You Make The Decision?
It is crucial to focus on a local market when you are looking for a real estate agent. This means that they should know the community you want to buy or sell in and be able to talk about its current and past conditions. Your Chilliwack Real Estate Agents can also help put you in touch with other professionals who will make sure that buying before selling goes smoothly.
Communicating and problem-solving are two essential skills when trying to schedule the dates of two transactions. This is necessary so that the new property will be funded on time and the current property can be given to its new owners without any issues when involved in buying before selling.
To ensure communication during the process of buying before selling your existing house, all parties involved must be on the same page. This includes everyone from the various REALTORS® to mortgage lenders/brokers and lawyers/notaries.