A common question and dilemma from home owners that are planning on relocating is: should we sell or buy first?
As a real estate advisor, I like to say that you are in the driver’s seat and are fully in control of the decisions in the real estate process. The reason that I’m saying this will make sense when I address the biggest myth and therefore, issue that sellers think:
“If I sell my house first, then I could be left without housing for me and my family.” That thought is the number one reason why people feel they should buy first and then sell. But let me break this down a bit more.
When you list your home for sale before buying, you are in control, you are in the driver’s seat. Since you haven’t bought another home, you aren’t in a rush and need to move and complete the sale of your home by a certain date. If you have interest in your home and receive offers, you are in control of what happens with that offer. Here are 3 different scenario outcomes to Joe and Suzy wanting to buy your home and make an offer to complete the sale in say 45 days:
1. Scenario A –You can either decide if 45 days is enough time for you to find a home to buy and if it isn’t, you simply say: “45 days doesn’t work for us, we want 75 days”.
2. Scenario B – You can say to them: “45 days is a bit rushed for us. We will accept the 45 days closing date but would also like to rent back from you for a one-month period”.
3. Scenario C – You can simply decline the offer and keep waiting for an offer that works better with your planned timeframe. I would suggest doing Scenario A first before simply declining, but this scenario illustrates that you don’t need to accept an offer that doesn’t work with what you want.
If I explain how it works if you buy another home first, this is how that scenario goes: You have found a house that you want to buy, and you make an offer. Since you still own your current house, you will need to sell it, so your offer on the new home will have a subject in place that is a ‘subject to sale’ and it usually has a 48- or 72-hour time clause, you therefore need to sell your home as quickly as possible. When that happens, you have lost control in the negotiating power of selling your current home. Most of the time, you will need to make price cuts to reach so that you can sell as quickly as possible and at that point, you are no longer in the driver’s seat, the buyer has the control. The emotions that surface in this scenario are heightened, and you generally are in a weakened position if you buy first.
The only time that I suggest buying first is when:
• You are after a truly unique property that is hard to find, and you finally come across one for sale.
This could be true whether it be an architecturally unique place, a unit in a specific condo building, a house on a specific street or in your desired neighbourhood.
Here is a real-life example to share with you. I was working with a couple last month and we found a house to buy in Maple Ridge. The house had an offer in place, but it was subject to sale. We luckily did not need to sell a house before buying, so we placed an offer with a quick closing date. During the negotiations, we found out that the sellers had already bought another home and the sale was completing very quickly, so they wanted us to close the deal even sooner. Once we found that out, the ball was in our court. We could negotiate even harder and further to drive that price down so that they could complete on time. Our offer was accepted as a backup offer and the original offer that was subject to sale, had 48 hours to remove their subjects, which meant that they had to sell their current home in 48 hours. In this market, that can’t be done. Their offer collapsed.
My clients ended up getting an amazing deal on the house and it was because the sellers had lost control and had to sell for less money to complete sooner. This gave them the cash to buy the next home that they already paid a deposit on.
To conclude, take the time to speak with your realtor about the area that you are planning to relocate to. Talk about the pricing, neighbourhood, how quickly inventory is moving, etc. in the area so that you have an idea about how the buying process will look like when it is time to buy. Ensure that your current home is on the market before you begin looking at homes to buy. You will realize greater proceeds and less emotional duress when you sell your home before you buy.
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