Should I Sell My Home Before I Hunt for Another House in Vancouver?

Written by Caroline Yuen on October 2, 2023.

The decision to sell your current home before embarking on the search for a new one is a pivotal one in the world of real estate. It involves careful consideration of your financial situation, risk tolerance, and housing market conditions. In this article, we’ll explore the pros and cons of both options to help you make an informed choice.

Option 1: Sell Before Buying

Pros:

1. Financial Certainty: Selling your current home before buying a new one provides financial clarity. You’ll know exactly how much money you have to put toward a new property, which can help you set a realistic budget.
2. Stronger Negotiation Position: When you’re not contingent on selling your home, you have a more attractive offer when making an offer on a new property. Sellers are more likely to accept your offer because they don’t have to wait for your current home to sell.
3. Reduced Stress: You won’t have the pressure of managing two mortgages simultaneously, reducing financial stress. The sale of your existing home can provide funds for the down payment on your new one.

Cons:

1. Temporary Housing: Selling first may require you to find temporary housing, such as renting an apartment or staying with family, until you secure a new home. This can be inconvenient and may involve additional costs.
2. Market Timing: You might sell your home quickly but struggle to find a suitable new one in a competitive market. This could result in a temporary inconvenience or delay in your housing situation.

Option 2: Buy Before Selling

Pros:

1. No Need for Temporary Housing: You can move directly into your new home without the hassle of finding temporary accommodations. This is particularly appealing if you have a family or prefer stability.
2. More Time for Decision-Making: Buying before selling gives you ample time to find the perfect property without feeling rushed. You can wait for the right opportunity to come along.

Cons:

1. Financial Risk: Buying a new home before selling your current one can be financially risky. You might find yourself responsible for two mortgages and associated costs, which can strain your finances.
2. Contingency Offers: If you need to sell your current home after buying a new one, your offer may be less attractive to sellers. You may need to offer a lower price to compensate for the contingency.
3. Pressure to Sell: The financial burden of carrying two homes can create pressure to sell your old home quickly, potentially leading to accepting a lower offer than you’d like.

The Middle Ground: Contingency Clauses

A compromise between the two options is to include a contingency clause in your offer. This clause makes the purchase contingent on selling your existing home within a specified time frame. While this approach can provide some flexibility, it may also limit your negotiation power and the pool of buyers interested in your offer.

In conclusion, whether you should sell your home before hunting for another one depends on your financial situation, risk tolerance, and local housing market conditions. Each approach has its advantages and disadvantages. Consulting with a real estate agent and financial advisor can help you make an informed decision that aligns with your goals and circumstances.