Should you buy or sell first?

By Lindsay Smith/Columnist

Two couples were enjoying a drink on a newly opened restaurant patio and were having a passionate discussion. Both couples were planning on moving to different homes and debating selling first or buying before selling. Overhearing their chat, I thought I would chime in with some thoughts based on the experience of 36 years of selling homes in Oshawa. Here are some of the points we covered as we sipped drinks in the sunshine.

Many of my clients are in the process of downsizing and these questions come up regularly. Truth is, there are pros and cons to both approaches and much depends on the financial stability of the client along with their tolerance for a bit of risk. One thing that cannot be disputed is that sellers in today’s market are rarely accepting offers conditional on a buyer selling their home. In the past two weeks in Oshawa, there have been 110 homes sold conditionally and only one was sold on condition of a buyer selling a home. This happens in a market where there are fewer homes to meet the needs of the buyers. Sellers can be more selective on what conditions they will accept when selling their homes. How about we dig a bit deeper into the questions.

Selling first: the pros are you can stick to your asking price and terms when an offer is presented. This comes from a position where you do not have to sell in order to meet dates of a home you have purchased. You can also be more selective on obtaining the exact closing date you want. The cons are that you may not be able to find a home that meets your needs or be able to negotiate a closing date that matches the sale date of your current home.

Buying first: the pros are you have a stronger offer, being able to offer terms, conditions and a closing date that the seller will find attractive. This helps when you are competing with other buyers attempting to purchase the home you are interested in (in Oshawa last week, 58 per cent of all sales sold for full price or over asking indicating there were competing offers in many sales).The cons are you may have difficulty selling your home and again matching the closing dates.

As we can see, the risk/reward results are similar for both options in making a move. I have found that discussing both options with clients and establishing their level of comfort in moving forward is the right exercise to go through to ensure that the planned move unfolds as smoothly as one could hope. One of the first “puzzle pieces” is the financial part. A chat with a mortgage broker or lender helps to answer the question about closing dates that cannot be matched up, or in an extreme situation, the home being purchased needs to be closed on without the sellers home being sold. Bridge financing is a tool used regularly when closing dates cannot be matched up and several tools are available to close a purchase without a home being sold.

One of the determining factors I have found that helps to ensure the best outcome is to do a wants/needs analysis on what type of home would be suitable in order to cause the seller to enter into the process of buying. If the home is a “needle in the haystack” type of home that rarely is offered, it makes sense to wait until a home comes up and to buy it before selling. We just had this happen with a client. While they were waiting, they had their current home fully staged, painted and ready to hit the market once they bought a home. They bought a home and their home was listed in less than a week.

We also had a seller of a country property who decided to sell before buying. The home was a country estate home, and the recent sales in the small community were taking longer to sell than in town. We placed the home on the market, and similar to the above example, our seller did her homework. While she waited for her home to sell, she was out looking at condos and lined up a few possible homes on a short list giving her many options once her home sold. In this case, the condo she was looking for was readily available.

As you can see, the direction a seller chooses requires a robust discussion, and in the end both decisions are right for different clients. My recommendation to anyone looking to move from a home they own is to enlist the services of a professional real estate broker, and come to your decision after weighing all of the options. There is nothing I find more personally gratifying then visiting a client in a new home with a memory of a stress-free move. We are living in times of stress and uncertainty; the best decisions come after educating yourself and finding a professional to guide you through the process.

If you need clarification on any of the options discussed, or if your situation has changed and you see a real estate emergency on the horizon, I can be reached at lindsay@buyselllove.ca

Lindsay Smith

Keller Williams Energy Brokerage