Moving to a new home can be exhilarating. A new place in a new neighbourhood can represent a fresh beginning where you can carve out experiences you would never have otherwise. It’s a lot like having a blank page for the next chapter in the story of your life. 

This transition also involves a lot of big decisions along the way. If you currently own a home, one of your first questions will be whether you should sell it before beginning the search for your next. In this post, we’ll explore the advantages and challenges of either buying first or selling first. 

Primary Factors to Consider

There is no cut and dry answer that works for everyone. Selling your existing home first is often the safest option, especially when there are plenty of listings on the market to choose from. 

Buying first can be a slightly riskier path, but also beneficial in certain markets and when you have significant financial resources behind you. Your decision will depend on several factors, each of which we’ll explore in more detail.

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Whenever you’re ready to purchase your new home in Ottawa, the resources below can help:

• Strategies to Help First-Time Buyers Enter the Real Estate Market
• Can You Buy a Home with a Co-Signer?
• Why Is Buying an Investment Property Different From Buying a Home to Live In?

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How Is the Market Behaving?

Whether you buy first or sell first will primarily come down to personal factors such as your risk tolerance and resources. However, the market itself will influence your decision, especially during unprecedented times of activity. 

A seller’s market refers to busy times when there are few listings and too many buyers who want them. During these conditions, selling your home is far easier than buying. Multiple offer scenarios happen frequently, and homes often go for well above the asking price. In this case, you might decide to buy first to get the hardest part of your transition out of the way.

Finding and securing the right home at the right price under these circumstances can take time. As a result, many homeowners will ensure they have an accepted offer on a new place before putting theirs on the market.

A buyer’s market happens when listings are in great supply but not enough people are willing and able to purchase them. In this case, buying is easier and selling becomes far more challenging. That’s why selling first is often the safest option. At the very least, you may want to wait until you have an offer on your home before beginning your search.

The Risks and Advantages of Buying First

Now that you know how outside factors might affect your next steps, let’s take a closer look at the benefits, implications, and worst-case scenarios of each route. 

Let’s imagine you decide to buy a home before putting yours on the market. The primary benefit of this option is the security of knowing you have a place secured once your sale closes. 

You eliminate the mad scramble of house hunting, packing, and moving while on a time crunch. If you take possession before your existing home closes, you have time for a thorough cleaning and minor repairs before moving in all of your belongings.

From a financial perspective, buying first can also be an excellent investment when housing prices are rapidly increasing. Your equity can potentially grow twice as fast since you technically own two homes that are growing in value.

The Implications of Buying First

On the flip side, buying first can be risky if the market takes a turn and housing prices fall after your purchase. Now you’re potentially losing on both properties. The amount of the loss will depend on how long it takes to sell your home after your new purchase closes. 

In the worst-case scenario, you will have to carry two mortgages for a time until your existing home sells. You can offset some of this risk by knowing the market beforehand and working with a seasoned real estate expert who helps you get the best possible result both when buying and selling. 

To learn more, read our post, Can I Use the Same Ottawa Real Estate Agent to Buy and Sell?

The Pros and Cons of Selling First

Selling your home before buying is the most traditional path, especially when the market is uncertain and you want to be sure of a successful transition. This is generally the safest path that provides the most peace of mind. 

• You don’t have to make offers on your next home based on what you hope your sale will earn. You’ll already have the money in the bank, or at least a solid offer and a deposit. 
• You’ll have extra negotiating power because you can drop the condition of sale of the existing home from your offer. When given a choice, most sellers will accept an unconditional offer, sometimes even at a slightly lower dollar amount. 

The Challenges of Selling First

Selling first can leave you in a bit of a time crunch to find and close on your new house. This is less of a problem in a buyer’s market where you have plenty of options to choose from. Nevertheless, you will not have the luxury of time that you would have if you had purchased it first. 

If your closing date arrives before you find a new place, you’ll need to find temporary accommodations for the short term. Not only is this more expensive, but it also means moving a second time and possibly putting your belongings in storage. 

In the worst-case scenario, prices might rise after your sale closes and before you find your next home. If the market changes very quickly, you might face affordability issues that impact what type of house you can buy and what neighbourhood you can choose to live in. 

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Do you need the best possible results when selling your home? The resources below will help empower you for your next steps:

• How to Sell Your Ottawa Home When You Have Kids or Pets
• When Is the Best Time to Sell My Ottawa Home?
• How to Get Ready to Sell Your House in the Spring

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The Ideal Scenario

Ideally, you would always be able to time the market in a way where you sell your existing home for the highest possible amount while securing your next for the lowest price. In reality, this scenario happens very rarely, and even the most informed expert can’t get their timing perfect. 

To make the most of your transition with minimal stress, the next best thing is to buy and sell in the same market. This is a much more achievable goal that is conducive to your long-term happiness and financial stability.

• If you sell in a buyer’s market, you’ll likely earn less from your transaction. However, it all comes out in the wash because you will also pay less to secure your new home.
• Buying in a seller’s market often means paying more, but you will also earn more when selling your existing property.

Whether you buy first or sell first, an experienced real estate team is a resource you won’t want to go without. There’s nothing like having a compassionate expert who can help you analyze your resources and guide you to the best decision for you. Knowing that advice and encouragement are a phone call away at all times will make your transition as streamlined and enjoyable as possible.

Do you have questions about buying or selling in Ottawa’s fast-paced market? The Chell Team is here for you. Reach out today to mail@chellteam.com or call  613.829.7484 to begin a conversation.