Moving to Toronto is a transition that is both exhilarating and intimidating. You may be moving up to a larger home, downsizing to a smaller, more convenient place, or transferring to a more exciting neighbourhood with all of the amenities you could ever dream about.
Toronto’s vast and diverse real estate landscape makes it all possible. Your transition will also come with several key decisions to make.
With all of the uncertainty in Toronto real estate lately, one of your most significant decisions will be whether to sell your existing home first or buy first. In this post, we’ll discuss the advantages, risks, and opportunities hidden within both options.
Assess the Big Picture
Navigating the real estate market at any time requires a thorough understanding of the current landscape as well as your personal goals, resources, and risk tolerance. While we always like to say you should move for your own reasons and on your own timeline, there’s no denying that market conditions will affect your decisions.
Generally speaking, many people like to sell their existing home before beginning the search for a new place. Taking this path ensures that you are not at the mercy of the market, which can change in a heartbeat. That said, buying first will also make sense in certain situations.
Your decision comes down to how much risk you are willing to take. Busy seller’s markets offer plenty of advantages for the seller, but the buyer might have to scramble to find the right place.
During a slow buyer’s market, the opposite is true. The buyer has most of the advantages, and the seller has to work harder to make the sale happen.
Are you getting ready to start your Toronto home search? The posts below will help you stay on track:
- 10 Mistakes Buyers Make and How To Avoid Them
- Will Bidding Wars Return to Toronto?
- What You Need To Know About Buying A House In A Changing Market
The Advantages of Buying First
Why would anyone take the risk of buying a house before their existing property sells? There can be many reasons, both depending on the market and your situation. Imagine that houses are selling quickly, at over their asking prices, which means the risk of being unable to sell your home is low.
On the other hand, purchasing a house might be tricky because now you’re facing competition from other buyers and potentially very few listings to choose from. In these situations, buying first can be comforting and far less stressful.
- You have all the time in the world to do any renovations you want, move your belongings, decide what goes where, and even get to know your new neighbourhood—all before you need to leave your existing home.
- You can be more selective about the house you buy since, which can be invaluable in a busy market.
- If houses are selling quickly and prices are rising, you may even have a financial incentive to buy first. If you can afford to carry both properties, you can grow your equity twice as fast.
The Risks of Buying First
Buying before selling is traditionally thought of as the riskier option. No matter how busy the market gets, there are never any guarantees in real estate. In the worst-case scenario, you are on the hook to purchase a new property, but your existing home takes far longer to sell than you anticipated. If this happens, you will need to find a way to cover the cost of both properties until a buyer can be found.
Before taking this route, you should ensure that you have a financial cushion to be prepared for anything. You can also apply for bridge financing to fill the gaps between the purchase of your new home and the sale of your existing one. Whenever you’re in doubt, it’s a good idea to consult with an experienced real estate agent who knows what is happening in the market right now and can help you make the best decision for you.
The Advantages of Selling First
Selling your existing home first is the most logical decision for most people, especially when the market leans in favour of buyers.
- With the funds from your transaction securely in your bank account, you know exactly how much you can spend on your new home.
- You eliminate the worry of your house not selling after you have already committed to buying.
- Selling first can also put you in an advantageous situation when competing with other hopefuls. Many buyers will try to mitigate their risks by putting in a condition of sale of the existing home first. However, you can safely drop that condition.
Imagine you are the seller, and you receive two offers, one with no conditions and one where closing the transaction is uncertain. Chances are, the guaranteed sale will be more compelling to you, especially if you have committed to purchasing a new home.
The Disadvantages of Selling First
In an uncertain market, selling first may be less risky, but that doesn’t mean that there are no risks. First of all, selling puts you in a time crunch to find and secure a new home, pack all of your belongings and move out by a specific day.
There is also the slight risk that the market can change after you sell your home and before you find a new one. If prices rise quickly, you lose purchasing power, and a house that was within your price range even a few short months ago may now be out of reach.
Regardless of what is happening in today’s market, the posts below can help you maximize your results:
- Is Staging Your House to Sell Still a Good Idea?
- Selling for Top Dollar in Toronto as the Market Shifts
- What You Must Disclose When Selling Your Toronto Home
There Are Always Opportunities
Whatever path you choose, there will always be some risks, and there will always be some opportunities. The best way to minimize any problems and make the most of your sale and subsequent purchase is simple. As much as possible, always try to buy and sell in the same market.
If you sell in a buyer’s market, the process may take longer, and the price may not be what you anticipated. However, remember that now you are also buying in a buyer’s market and have all of the advantages that go along with it, including more negotiating power and plenty of listings to choose from.
When you’re buying in a seller’s market, you may feel like you’re trying to swim upstream. Everywhere you look, prices are skyrocketing, and the competition is fierce. But when the time comes to sell your home, you will likely have plenty of buyers bidding on your property and could even earn ove your asking price.
Navigating an uncertain market can seem intimidating, but a local real estate agent can help you through it while making the most of both transactions.
With the big move behind you, you can move on to more important decisions, such as what colour paint you want, what artwork you should hang on the walls, or what restaurant in your new neighbourhood you should try first.
Are you ready to take the next step but not sure where to start? An experienced Toronto real estate agent can help you determine the best path forward. Feel free to reach out to us at Erica@EricaReddy.com or call 416.443.0300 with any questions you may have.
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