In Windsor-Essex County's evolving real estate markets, both buying and selling a home are very personal decisions. When buying and selling at the same time, and the process becomes even trickier. It is important to remember that everyone's circumstances are unique and what works for one may not be the best method for others.
Reasons to Buy Before Selling:
- Lock in your low interest rate:
- Interest rates are at historic lows right now, and typically your mortgage broker can lock in your rate for 90-120 days. It’s important to note that you need to have your completion date occur within that 3-4 month range, not just have an accepted offer by then. If you buy first, you’re more likely to fall within that range and lock in a great rate.
- You have some room financially:
- One of the cons of buying before selling is taking the risk that your current home won’t sell in time, or you’ll have to bridge finance if the dates for your sale and purchase don’t match up perfectly. If you feel like you can afford a potential bridge, but more importantly are comfortable with potentially paying two mortgages at once, then buying before selling might work better for you.
- Your current home is in high demand with low supply, and it will most likely sell quickly:
- This will help to minimize the financial risk of buying first. If the market says your home is in high demand, and typically all comparables have been selling within 7 days, then your home should do the same.
- Your future home is also in high demand with low supply, and you feel you'll have a difficult time getting in to what you need and want:
- The Windsor-Essex County real estate market is extremely active right now, and if your future home is in high demand with limited supply then you’re most likely looking at a multiple offer scenario. When you buy before selling, you’ll know that even though you may lose out on a multiple offer that you still have a roof over your head at the end of the day.
- You need a large property selection:
- If you know you’re a picky buyer (and that’s OK!) it might not be a bad idea to buy before selling so that you can guarantee you get what you want.
- You plan on renovating your new home significantly:
- It can be nice to renovate when you haven’t yet moved in to the house, as renovations can be a bit of a war zone. If you get possession of your new home before you have to move out of your current home, it gives you the ability to renovate while it’s still vacant.
Reasons to Sell before Buying?
- You know the exact dates you need for your purchase, because you’ve already sold and agreed on dates with your buyers:
- A pro of selling before buying is that you know the exact dates you need to move out, and thus have an idea of when you need to move in. This will also help to minimize and eliminate bridge financing payments.
- Your mortgage broker doesn’t need to work off of an “estimated” sales price for your home, and can more accurately estimate what you can afford to purchase:
- This is huge, because you don’t actually know what you’re going to sell for. At the end of the day, once you do sell your home, you may have been able to purchase more or actually be stretched too thin. Knowing exactly what you can afford is a huge bonus for selling before buying.
- You have alternative living options, and can bunk at a friend or family’s place if you don’t find a home in time:
- If the home of your dreams has a quick close and you’re not so sure that your sale will, then do you have alternative living options? Is your sale more about the price or the dates? If you’re worried about being homeless, then selling before buying may not be for you. With that being said, your realtor can certainly negotiate a longer close for your sale, and it’s really not always about the price for everyone – but more about meeting in the middle with price and dates.
- Your property is in high demand with low supply, and your next home is the opposite:
- If the home you’re looking for doesn’t have the same kind of demand that your current one does, then it should be an easier transition in and the ball should be in your court. If you don’t think that your new home is going to be a difficult purchase, then you have some flexibility when it comes to selling first.
- You avoid the stress and costs of your home not selling and paying two mortgages:
- When you’re selling first, you know that you’ve already sold – which means that you know that you’re not going to have to pay two mortgages at once! If you don’t have the financials or the risk tolerance to keep two mortgages going (which most people don’t), then selling first may be a better option.
So what should you do – buy or sell first? It’s really hard for us to say which one is better, because it all depends on what your personal risk tolerances are and what the market is doing at the time. If you’re thinking about buying and selling, and are looking for some guidance contact us today! We would love to discuss your options with you.
*Things Our Lawyers Require us to Say - Armstrong - Bentley & Associates is not a financial, tax, legal, insurance, or investment advisor, and this article is meant for informational purposes only.