Buy first or Sell first? in a Real Estate Transaction …

One of the most common question I got asked lately from the client, is “I want to sell my house and move to a bigger one. Should I buy the new house first, or should I sell my existing house first?”

Common perception my clients had is “buying first is risky”, and they should sell first. After all, if you bought the new house and somehow cannot sell the existing one, you are stuck. You need the money from the property sold, to use as the downpayment of the new house. Indeed that is correct, and that is one way to look at this question.

However, imagine you sold your existing home and the closing is a month from now and you just lost twice in the bidding war. How nervous would you be? Would you be worry about where you live a month from now? Would you be willing to pay $10,000+ extra on your purchase in order to win the bidding war? I had been there and done that, and let me tell you, I am very anxious when I have only a few weeks left to move out of my house but still have not secure my future home.

So then, what is the best approach, if selling first or buying first, both would make you nervous and anxious?

I think the key to this question is, whether it is a buyers or sellers market now. This article is written in early March of 2021 and in Canada, it is definitely a seller markets. The supply of the house on the market is far fewer than the demand and so the price shot up like a rocket. Every property that is on the market is being scoop up in a matter of days. In this situation, seems like the risk of not able to buy your next house is far greater than not being able to sell your existing house, so generally speaking, you should buy first and sell after. However, this is a general suggestion as your existing house might have some specific issues that is harder to sell etc, and so you should always consult your real estate agent and see if he is confident to sell your house between your purchase date and the new house closing date.

Hope you enjoy this article and you can reach me at mortgagehackercanada.com where I teach New Mortgage Agent to make more money faster.