After owning a house for several years, the time has come to consider a change. Whether you're upgrading, downsizing, or relocating, one big decision stands in your way: should you buy your new home first or sell your current one?
There’s no one-size-fits-all answer. It really depends on your unique situation—and the current state of the housing market.
While market conditions play a big role, your personal goals and comfort level should always be the primary deciding factors. In this post, we’ll talk about the implications of buying first or selling first so you can choose what’s right for you.
How the Market Impacts Your Decisions
Sometimes, the market leans heavily enough in one direction to simplify your choice. In a hectic seller’s market, each listing sells in the blink of an eye because there are not enough houses to satisfy the insatiable demand from buyers.
In this scenario, you can almost be sure that your home will sell successfully, often within days of hitting the market and above your asking price. Buying will be much more challenging since you’ll soon find yourself competing with other buyers for the few available listings.
In this case, many people decide to get the hard part out of the way and buy first. Once they’re sure they have a place to go, then they put their existing house up for sale.
Now let’s examine the opposite scenario. It’s a slow buyer’s market, with numerous houses for sale and very few people searching. Your house sits on the market for a long time, and you may have to make several concessions before finally finding a buyer.
Selling your house can be a bit like pulling teeth under circumstances like these. Once it’s over, you can breathe a sigh of relief. Since finding a new house will be so much easier, selling first might be your best course of action.
Generally speaking, the advice is to buy first when the market is hot and sell first when things slow down. That said, there can be unusual circumstances to consider before selling or buying your next home even when the market seems simple and straightforward.
What Are the Risks of Each Option
Knowing the market and planning for success will help you minimize the risk involved with any transaction, whether you choose to sell or buy first. Of course, nothing is without its downsides or challenges, so let’s take a look at the implications of both.
Buying First
When buying first, the biggest risk is that it might take longer to sell your existing home than you planned. You also have no way of knowing precisely how much you will earn from your sale. Your house may go for well above your asking price, but no one can guarantee this will happen. If you decide to sell first, you should always be prepared for the possibility that you might have to carry two mortgages for the time being.
You can minimize this risk in three ways:
Prepare your home for sale early. Make sure your house is cleaned, updated and staged before you buy your next home. Buying first does not mean you have to be unprepared to sell quickly!
Build a financial buffer. Set aside an emergency fund in case you do have to cover the costs of two properties for a time. Alternatively, you can arrange for bridge financing.
Hire a great real estate agent. Work with an well-connected, experienced agent who can showcase your home to a network of qualified buyers.
Depending on the market and your personal circumstances, the advantages of buying first can far outweigh any negatives.
With your new home already secured, you don’t have to rush or worry about not finding a place on time.
You can start moving your belongings into your new home before closing the sale of your current home.
If the market is appreciating, you could benefit from growing equity on both properties for a short period.
Selling First
Selling first is almost always the safest option in most markets and for most homeowners. Even so, this path can have its disadvantages.
Once your house sells, you’ll need to find a new home quickly. This added pressure can be stressful, especially if listings are limited.
The moving process is also rushed as you need to be out of your existing home on your closing date.
In the worst-case scenario, the market might change, and houses become more expensive once you start looking.
In spite of these risks, there are several reasons many people decide to go this traditional route. In many cases, the peace of mind is well worth it. Selling first is particularly advantageous in a balanced or buyer’s market.
Budgeting for your new home becomes much easier and more accurate since you will know exactly how much money you have in your pocket after your sale is finalized.
Your offers will be more competitive since you won’t need to make them conditional on selling your current home.
You avoid the financial strain of carrying two mortgages or being caught off guard by a slower-than-expected sale.
Hidden Factors to Consider
The decision to sell or buy first can also depend on the structure of your house itself and the neighbourhood you live in. For example, imagine you currently own a home with a very unique design. As spectacular as it may be, it can take longer to sell.
On the other hand, some listings in highly desirable neighbourhoods go very quickly and at high dollar amounts, regardless of overall trends
Every home—and every move—is different. That’s why working with an experienced real estate agent can make all the difference. A good agent will help you navigate timing, negotiations, and everything in between to make your transition as smooth as possible. Let’s chat!
