As a Toronto Real Estate Agent I am often being asked this question, should I buy or sell first? The answer to this question depends on 2 different factors, then comes in the timing. Basically in order to know whether it’s better to sell first or buy first you have to understand the market that you are located in right now and the market that you are planning to move into.
If you are in Toronto, a Top Toronto Real Estate Agent should be able to help you to understand the Toronto real estate market better. However, the real estate market in Toronto is not one size fits all, it might change from one pocket to another. We’ll cover that in a bit further in this article.
Should I Buy First or Sell First? Buy First then Sell Scenario:
In certain cases you might find it easier and more beneficial to buy first and then sell later. In this section we’ll go through the possibilities of buying first.
1. When your current property is considered high in demand in your market.
In this scenario you need to make sure that you are able to sell your home after you find your new home. In this case you need to ask your real estate agent to see what’s the average DOM ( Days on the market ) and MOI ( Month of inventory ) in your local market. If your home is comparable to the last solds and there is a high demand for your home, then it might be easier to sell it anytime after you find a property to buy.
An example can be a Townhouse in a high demand area and a high demand price bracket. If townhouses in your area, for example Downtown Toronto, that are worth $750K- $850K fly off the shelves with an average DOM of less than 7 days and MOI less than 1 MOI, then you are in a high Seller’s market. If your home doesn’t have major issues it probably might sell the way that others are selling at the same time! First consult with your local REALTORⓇ about it, because each property is unique and your property might have different characteristics than those that sell fast!
2. When you are buying into a sub market that your target home is hard to find.
In this case, you are buying in a pocket that the home that you want, comes to the market rarely. In this case you also need to make sure that you get a long closing from the seller. In cases that the closing of your purchased home is super tight or even before the closing of your current home, you can discuss options such as Bridge Financing with your Agent or Mortgage Broker.
If your current home is in a buyer’s market with lots of inventory and homes the same as yours that are sitting on the market, you should beware of buying first. No matter how hard it is to find the target home. Unless you have enough money or can use bridge financing to close on the purchased property and then wait for your current home to sell.
Should I Buy First or Sell First? Sell First then Buy a Home Scenario:
In some cases it makes more sense to sell first, then buy a home. To sell first, you need to make sure that you’ll be able to buy what you want in the period between the closing of your home. There are solutions if you can’t buy something before the closing of your current home, but they are costly. The solutions are finding a temporary storage for your furniture, or temporary accommodations for a month or two such as an Airbnb.
1. When your target market is a buyer’s market
If you are planning to move into a market that is saturated with homes that you like, you might be better off selling first if you are sure that you can find what you want in your target market. Example is a market that you are planning to move into that has the homes that you like selling with over 30 Days on the Market and over 4 Month of Inventory.
2. When your current market is a buyer’s market
If the houses are taking time to sell in your area, and also your target market that you are looking to move into is a buyers market as well, then it’s a good idea to sell first. This will give you the exact dollar amount that you can get from the sale of your home and then go shopping with that number in hand.
Read More : Rent vs Buy Calculator
All in all, if you want to know to sell first then buy or buy first then sel, you need to understand your current and target markets. If you are in Toronto and you don’t have any REALTORⓇ helping you with that, you can get help from a Top Toronto Real Estate Agent. There you can submit a request and you’ll be matched with one of the Best Toronto Real Estate Agents who covers your area.