Buy or Sell First?
What you should do depends on market conditions
Navigating the decision of whether to buy or sell a home first presents a classic real estate catch-22 situation. It's a pivotal choice that requires careful consideration of your unique circumstances, real estate market conditions, and financial readiness.
On one hand, opting to sell your current property before buying a new home or condo can offer a sense of financial security. It provides a clear understanding of your budget and prevents the risk of carrying two mortgages simultaneously. In a buyer's market, where inventory exceeds demand, this approach can empower you to negotiate from a position of strength.
On the other hand, choosing to buy a new home before selling your current one might be driven by the fear of missing out on a desirable property. In competitive seller's markets, where demand outpaces available homes, securing your dream home quickly becomes a priority. However, this approach carries the risk of managing two mortgages temporarily and necessitates a strategic plan for coordinating the transition.
Contingency offers and bridge loans can offer some flexibility in these situations. A contingency offer makes your purchase or sale contingent on the success of the other transaction. While this approach might extend your timeline, it provides peace of mind. Bridge loans, meanwhile, provide short-term financing to cover the gap between selling and buying, helping manage financial strain.
The prevailing market conditions, your financial readiness, and personal preferences all play a role in unraveling this real estate conundrum. Seeking guidance from knowledgeable real estate professionals is invaluable. They can provide insights into local market trends, offer strategic advice, and help you make an informed decision tailored to your goals and circumstances.
Ultimately, whether you choose to buy or sell first, understanding the nuances of your situation will ensure a smoother transition into your next chapter of homeownership.
Here are some considerations for both options:
- If you find your dream home and fear it might be sold to someone else, buying first ensures you secure the property.
- You will have ample time to move, renovate, or make the new home ready before selling your current property.
- You will not be rushed to find a new home which can help you make a well-informed decision.
- In a competitive seller's market, buying first might be necessary to secure a suitable property.
Risks of Buying First:
- You might be stuck with two mortgages if your current home does not sell quickly.
- Financial strain if you cannot cover two mortgages, property taxes, and maintenance costs.
- You might need to sell your home at a lower price to avoid carrying two mortgages.
- You will have a clear understanding of your budget when looking for a new home.
- Selling first eliminates the risk of carrying two mortgages and reduces financial stress.
- You are in a stronger position to negotiate with sellers, as you won't be contingent on selling your home.
Risks of Selling First:
- You might have to move twice if you cannot find a new home before your current one sells.
- In a competitive buyer's market, finding a suitable home might be challenging.
A contingency offer makes your purchase or sale contingent on the successful sale or purchase of the other property.
This can give you more flexibility but might be less attractive to sellers.
A bridge loan can provide short-term financing to cover the gap between selling your current home and buying a new one.
This option might help avoid having two mortgages temporarily.
Your choice can also be swayed by whether it is a buyer's or seller's market. In a buyer's market, many opt to sell their property before buying to mitigate risk. Conversely, in a seller's market, purchasing a property before selling might be prioritized.
Evaluate your financial stability, ability to carry two mortgages, and the potential cost of temporary housing if you sell first.
Your comfort level with moving twice, risk tolerance, and urgency to buy or sell will influence your decision.
With a wealth of experience in assisting clients in similar situations, our team is well-versed in these dynamics. We can delve into strategies that save time, enabling you to buy before selling.
If you are grappling with the decision of whether to buy or sell first, partnering with us offers a solution to alleviate your stress. Our commitment ensures that the sale of your property is not only productive but also financially gratifying.