When it comes to shopping for a home, many people wonder if they should wait until they find a buyer for their home before making an offer on a new property. There is no single answer: it all depends on your financial situation.
Indeed, the financial situation is often the key factor in this decision. But it's not the only thing to consider. Here are some important questions you can answer to help you assess what's best for you: selling before buying or buying before selling.
Your financial situation
A homeowner who is financially well off does not usually ask this question. He buys his favourite house and waits for a serious buyer to come along for his old home, without any further stress. However, it is important to remember that this situation requires the payment of the mortgage, property taxes and maintenance fees for both homes for an indefinite period of time, which can take several months. In addition to these payments, you must not forget the down payment on the new property. These amounts can quickly become too much to bear. Get your calculators!
The market trend
Certain elements can counterbalance an insufficient financial situation. For example, if the market is favourable to sellers, i.e. there are few houses for sale and there are many buyers. This means that many buyers will probably want to visit your home and make an offer to buy. In this context, we are confident that the sale will be made quickly, and it will no longer be a problem to acquire a new home in a hurry.
The property you want
In real estate, the expression "one lost, ten found" does not always apply. Homes that meet desirable criteria or are listed below their value sell like hotcakes. In these cases, buying immediately is probably a good idea. However, there are solutions to avoid getting into a financial mess, such as bridge financing. But this solution is not always possible.
Banking institutions sometimes suggest bridge financing, which is basically financing your down payment by pledging the equity in your home for sale. This is not a service that can be offered to everyone, but when it is possible, it is a winning solution. Reasons for rejection can be varied, including a property that the bank deems difficult to sell.
Purchase with conditional sale of your house
If you find a dream home, you could suggest that the seller add a conditional sale clause to the promise to purchase (the contract that stipulates that you agree to become the buyer). This way, you reserve the house for a while, which gives you time to sell your house. But beware, it is rare that the seller agrees to put a long delay on this clause. Many do not allow more than two weeks. And understandably so: during this time, they could miss out on serious buyers.
So, considering your personal situation, what is the best avenue for you?
Contact me for more information and advice for your project. It will be my pleasure to help you.