Ask anyone who appears to be in the know, and they’ll tell you that the real estate market in the GTA is out of control. Skyrocketing prices, low inventory, and incessant demand from buyers who are all competing with each other. But those of us well acquainted with the industry are used to these fluctuating conditions. 

While the recent years have been a little more hectic than usual, some things never change. The market moves fast, and the advantage can switch from sellers to buyers and back again within a matter of months. One constant you can always count on is that accurate information, calculated risks, and unbiased guidance can help you reach your goals even as the market goes crazy. In this post, we’ll look at the implications of buying or selling first once you’ve decided that a move is in order.

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Today’s Market at a Glance

Generally speaking, it helps to know that we are always in either a seller’s, buyer’s, or balanced market. Conditions can vary in different neighbourhoods and even from one listing to another depending on how desirable a particular house is. However, at the time of this writing, we are in a very interesting and unusual situation. 

Inventory is critically low, which normally indicates that sellers have a massive advantage. If you look at the numbers, there are far more people searching to buy a home than there are those willing to sell. And yet, some houses are not selling or are sitting on the market far longer than they should in these conditions. 

There was a time when being in a “seller’s market” all but guaranteed a fast sale, often at a price much higher than anticipated. But these days, all bets are off as both buyers and sellers are putting their decisions on the back burner. With so few listings available, buying first may be a good idea. However, there are risks and challenges that mean you should proceed very carefully.

Buying a house can be tricky in a tight market. Here are some resources that will help you proceed:

When Buying First Makes Sense

Moving to a new home can feel like a daunting task because there are so many moving parts to the process. But it all comes down to selling your house and buying a new one. If you decide to sell first, you have a clearer picture of how much you can pay for your new home.

The challenging part is that when you start searching, there may be very few listings with many other people bidding on them. Even worse, now you’re in a time crunch because your closing date is fast approaching, and you are scrambling to find a home. In this case, buying your new home before selling can make sense, even though there are some risks involved. With a new place safely secured, you can put your house on the market without stressing over having a place to go.

In a “normal” seller’s market, you can be reasonably assured that your house will sell. However, in the current market, some listings are not selling nearly as fast or for as much as the owner anticipated. If you’re already committed to another home purchase, this can be a problem.

Minimizing the Risks of Buying First

The tips below will help you minimize your risks while still allowing you to find a home you love.

  • Be realistic and very conservative about how much you believe your existing home will sell for. One of the biggest mistakes people are making is paying too much for a new property, then coming up short with the financing because their house didn’t earn as much as they had hoped. Your real estate agent can perform a detailed CMA (Comparative Market Analysis) to ensure this doesn’t happen to you.
  • Get pre-approved for a mortgage before hunting for your new house. This will help you create a realistic budget and stop you from getting in over your head.
  • Set aside a financial cushion in case things don’t work out according to plan. This can save you a lot of stress if you have to cover the mortgage on both homes for a certain amount of time.
  • Work with a real estate agent to fully maximize the sale of your existing home. Yes, you want to be conservative about the numbers. However, there are many minor details that can help you sell faster and for more money after your transaction finalizes.

Looking for more resources that will help you sell your home successfully? The posts below might take some stress out of the process:

The Risks and Advantages of Selling First

Selling your existing home first is widely considered the safest option when upsizing or downsizing. Having the money from your sale safely in the bank means you can begin your house hunt with a firm budget in mind. Selling first was the traditional path for many years until the real estate market became so competitive. 

Now, if you wait to buy a home until you accept an offer on your existing property, you may be under intense pressure to find a new place quickly. Plus, prices can rise rapidly the longer it takes to find a suitable home. Once again, there are a few ways to minimize your risk.

  • Pull out all the stops to ensure you maximize the value of your existing home. Your real estate agent can help you set a competitive price and promote your listing to the highest calibre of buyers.
  • Do your homework ahead of time. Create a plan for what neighbourhood you want to live in and what features you want your new house to have. This means you can act quickly when the right listing comes up.
  • Make arrangements for temporary accommodation if necessary. The pressure is on in a tight market, but that doesn’t mean you should settle for something unsuitable. Having a place to stay in the event that your search takes longer than you hoped allows you to be more selective about this life-changing decision.

What’s Your Next Step?

Whether you decide to sell first or buy first often depends more on your financial situation and risk tolerance than any outside factor. Some people are naturally more conservative than others, which is not necessarily a bad thing! What is important is that you do what feels most comfortable for you and your family. With patience and a little guidance from a local real estate expert, you can navigate these unchartered waters and enjoy a seamless and successful transition to the perfect new home.

Are you ready to take the first step towards your next stage in life? It all begins with some honest advice for navigating a challenging market. Reach out today at damir@damirstrk.com or call 416.884.7925 to determine your best course of action.