Should I Buy My Home First or Sell First?
If you plan to buy once more after you sell, you're likely wondering what should come first. What to do? Should I buy or sell first?
If you Buy first and then Sell:
This strategy makes the most sense if you're in a hot market where you're likely to encounter a bidding war over prime real estate or encounter a home that you must have.
The main risk here is that you could get stuck making payments on two houses if your old home doesn't sell fast enough. Plus, you will have to come up with the cash for a down payment.
Many people use their home-equity line of credit as a "bridge" loan to supply the new down payment. But you need to have over 30% equity and meet other criteria.
In a buyers market you can make your offer to buy a new home contingent on selling your old one? But because it has been a strong market in Toronto, Mississauga and the rest of the GTA, where most sellers won't even consider such a deal. Because it ties them up with an offer that is by no means a sure thing. And a seller would obviously rather go for a sure thing—their home sold!
But if you decide to buy first, at the least, have a minimum of 2-4 month closing. Remember to give yourself time. The more time you give yourself the better offer you will be able to secure.
If you decide to Sell first and then Buy:
Most REALTORS® would prefer that their clients sell first because it is safer for their client.
But one trouble is, after selling your home, if you've already agreed to vacate your home in 60 days, you could feel burdened to settle for a house that falls short of your ideal.
A positive can be if you sell first, you can take some of the heat off by negotiating better terms for your home sale.
One of the best guidance I can give in either case is aim for a longer period until closing, for example 90 days instead of 60. Because if you decide to buy first, you will have enough time to sell your home and in your terms. If you decide to sell first you have enough time to find a home that meets your ideal. Time, is the best solution!