By far, the conversation we have the most with potential house sellers is where they will go after their home is sold. This is especially true for home sellers in West Toronto, where the market is fiercely competitive. If you are a homeowner, you will likely sell your home very quickly, but it could take you a while to purchase your home. So, should you sell first or buy first? There is no perfect answer. It depends mostly on your family situation and what kind of risk you are ready to take on. The overwhelming preference of most of our clients has been to sell first and then buy.
This is because the market favours sellers, and it is often easier to sell a house than it is to buy one. With that said, let’s break down the pros and cons for both scenarios!
The Pros and Cons of Selling First:
Pro: If you sell your house before buying your next home, you will know exactly how much money you have for your next home. This will stop you from buying a house that is over your budget before you know for sure what your house will sell for. Or, conversely, you could make far more money than you were hoping for and can budget for a larger house.
Con: Selling first can really put pressure on finding your next house. This is not always an easy task in west Toronto (or anywhere in Southern Ontario these days…). You may feel a lot of extra pressure to buy something quickly and therefore get something that you’re not thrilled with. If you do sell your home before you buy something, you should be prepared to rent an Air-BnB for a few weeks or months to ease the stress of buying your dream home immediately.
However, if you rent a home for too long, your purchasing power for your next home will go down dramatically because the interest you earn on the cash from your house sale will not go up at the same rate as the real estate market. Even a few months could make a huge difference in your purchasing power.
★ If you want to learn more about selling your home in Toronto, have a look at these posts:
The Pros and Cons of Buying First:
Pro: This is most people’s first choice! Buying a home in Toronto is hard, and many buyers lose out on several properties before they finally “win” an offer. It is important to most buyers that they do not feel pressured to make this huge decision quickly.
Con: You don’t know how much your house will sell for. For almost all house buyers, the sale of their home impacts their budget for purchasing a home. This can be a huge question mark for a lot of homes. Good real estate agents can give you a thorough market evaluation of your house, but that is always only the best guess.
The market can fluctuate daily depending on several factors that are totally out of our control. You should purchase your home using an extremely conservative evaluation of your home.
★ If you want to learn more about buying a home in Toronto, take a look at these posts:
Ultimately, this is a question of what kind of risk you are willing to assume. Worst case scenario for you selling first is that you’ll need to rent a house for a few months. Worst case scenario with buying first is that your house sells for less than you thought it would, and you need to come up with extra cash. Figure out what feels comfortable to you and go with that option.
Please reach out if you have any questions.
As always, stay safe!
Robyn VanderVennen
The Kim Kehoe Team
