If you’re planning a move, one of the biggest questions you’ll face is whether to sell your current home before buying a new one. It’s a tough call and the right choice depends on your personal circumstances and the state of the real estate market.
However, there are some compelling reasons why selling first might make the most sense. In this post we’ll explore five key benefits of selling your home before buying your next one.
1. Reduced Stress: One Mortgage at a Time
Managing two homes at once is not for the faint of heart. Unless you’re in a position to comfortably carry two mortgages then selling your home first can relieve an enormous amount of financial stress.
In Canada, lenders typically look at your debt-to-income ratio when qualifying you for a mortgage. Owning two homes—even temporarily—can strain your finances, especially if your current home doesn’t sell as quickly as expected. By selling first you eliminate the worry of juggling two mortgages, property taxes and utility bills. Plus, without the looming deadline of making double payments, you can focus your energy on finding your dream home.
2. Clearer Financial Picture
One of the biggest advantages of selling your home first is that it provides a clear understanding of your financial position. When your home sells, you’ll know exactly how much equity you have to put toward your next purchase.
The selling price of your home might not match your initial expectation; especially in a shifting market. If you buy first then you could find yourself stretched thin if your home sells for less than anticipated. Conversely, if your home sells for more, you’ll have a larger down payment, which could open doors to better mortgage terms or a higher price range for your next property.
Knowing your numbers ahead of time lets you approach your home search with confidence. There’s no second guessing or financial surprises and you’ll avoid the stress of dipping into savings or relying on bridge financing.
3. Stronger Negotiating Power
When you’ve already sold your home you enter the market as a buyer in a stronger position. Sellers often prefer offers from buyers who aren’t tied to a sale contingency as it reduces the risk of delays or deals potentially falling through.
In competitive markets, having the freedom to make a clean and unconditional offer can be a game changer. Even in a slower market, being ready to close quickly can give you an edge. Sellers appreciate buyers who are ready to go and it could mean the difference between landing your dream home or losing out to someone else.
There are plenty of make-or-break details involved in selling your home – check out these blogs for more advice!
- Why A Home Doesn’t Sell
- If You’re Planning on Selling, Here’s Why Decluttering Is So Important
- Four Things Agents Consider When Setting Listing Prices
4. Time to Sell Strategically
Selling your home before buying allows you to focus on maximizing its value without the pressure of a looming move-in date. You’ll have the flexibility to take your time preparing your home, staging it and listing it at the optimal price point. Rushing to sell because you’ve already purchased another home can put you in a weaker position as a seller. You might feel compelled to accept a lower offer or compromise on terms just to avoid carrying two properties. By selling first, you can wait for the right buyer ensuring you get the best possible outcome for your current home.
5. Flexibility with Your Move
When you sell first, you have more control over the timing of your move. You can negotiate a longer closing period or even a rent-back agreement giving you extra time to find and secure your next home. This flexibility can reduce the likelihood of feeling rushed or settling for a home that isn’t quite right. It also gives you the freedom to explore different neighbourhoods, compare properties and wait for the right opportunity to come along.
6. Avoid the “What-If” Scenarios
Imagine this: you buy your dream home first only to find out that selling your current home is taking longer than expected. Or worse, the market shifts and you’re forced to lower your asking price significantly just to secure a sale. These scenarios are not uncommon, especially in a balanced or buyer’s market where homes don’t move as quickly. Selling first eliminates this uncertainty giving you peace of mind knowing you won’t be caught in a financial bind.
It’s important to plan in advance for your home purchase. Explore these blogs for more advice.
- 3 Secrets to Negotiating Better
- What To Expect When Buying
- 5 Questions to Ask When Interviewing a Realtor
7. What About the Downsides?
Of course, selling first isn’t without its challenges. The biggest downside is that you may need temporary housing if you haven’t found your new home by the time you close. Renting or staying with family can add extra steps to your move but the short-term inconvenience is often outweighed by the financial and emotional benefits of selling first. Alternatively, you could explore bridge financing which allows you to carry two homes for a short period. However, this option should be carefully considered and discussed with your mortgage broker as it comes with additional costs and risks.
The Bottom Line
Selling your home before buying a new one isn’t always the easiest choice but it’s often the smartest. Reduced stress, a clear financial picture, stronger negotiating power and the ability to sell strategically are all compelling reasons to consider this approach. As with any major decision, it’s important to weigh the pros and cons based on your unique situation. If you’re unsure about the best path forward, reach out to our team for a consultation to guide you through the process and help you make an informed decision.
Buying or selling in Ottawa? Our team can help! Call 613.909.8100 or email Info@PilonGroup.com to get in touch.
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