My clients frequently ask me this age-old question as they contemplate their next chapter in life: “Should I buy a home or sell first?” My answer is always the same: “It depends.”
To answer the buy or sell question, it usually boils down to which step will be harder for you. There are a few factors I always evaluate to determine this.
Will You Be Buying in a Buyer’s Market?
When they report on real estate statistics, news outlets don’t tell you that there are micro markets that may differ from the broader market data being reported. You’ve heard the adage:” Location! Location! Location!”
This is very true. Even in a buyer’s market, you may find desirable neighbourhoods where competition is still very high and inventory is low. So, one of the first factors we will consider is where you plan to buy.
The wider your search area, the more flexibility we have in your purchase. The more inventory we have to look at, the easier it will likely be to buy. I’ve had a client only willing to look at Oakville properties within a 5-minute walk of the GO train station. These are all factors that could make buying harder than selling.
On the fence about moving to a smaller home? Click here to read my post about 5 telltale signs it’s finally time to downsize.
What’s Available?
What is the inventory in the housing type you are looking at? Just as we look at the micro markets you’ll be searching in, we also will look at the housing type. If you are trying to find a bungalow in the prime Beaches area in Toronto, you will be looking for a long time. There just aren’t many in existence anymore. I’d suggest we broaden our search locations, and if you were inflexible on this criteria, I might suggest buying first.
What Else is in Your Search Criteria?
Do you have mobility issues and only want to look at wheelchair-accessible properties? I have a client who used a walker but could only navigate ramps with a slope of less than 5%, which narrowed down our list of condo buildings we could consider. We also needed to factor in tripping hazards and look for properties that didn’t have hard surfaces to carpet transitions that were more than ¼” as his disability made it such that it could pose a fall hazard for him. Depending on the location, these factors could add to the degree of difficulty in finding a suitable property.
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How is the Market Trending?
Is the market trending up or down, or is it stable? If the market is trending upward, we may want to jump in early before it gets out of reach. If it has been stable, time might be on our side. I usually tell my clients to buy and sell in the same market. Almost no one who tries to time the market wins. I had a client attempt to do this in 2021, hoping the rising market would drop after selling their home. They were wrong, and within five months, the houses in their desired neighbourhood had appreciated 150k, and when they jumped back in, they needed to search in a secondary neighbourhood.
Moving With the Market
If you buy and sell in the same market, when the sale is down, the buy is down; when the buy is up, the sale is up. I often take my buyers out on a trial tour of available properties. This helps reassure everyone of the current available inventory and what you like or don’t like about the properties we are looking at so we have a real sense of your needs and how difficult the search will be. It isn’t unusual for a client to say they want x, but it morphs a little once we stand in a property. Things may move on or off of the deal-breaker list.
The bottom line is that if you want to buy first, it will constrain your sale. You will have a time constraint, and because of this, you may need to be more flexible on other factors, such as your sale price, if the market starts trending downward because of your timing.
Will You Be Selling in a Seller’s Market?
In a seller’s market, we tend to buy first, while in a buyer’s market, we often sell first. Micro Markets apply when you are selling as well. We won’t have much difficulty selling if you have a contemporary home in an in-demand, low-inventory neighbourhood. If you are flexible and allow complete home staging, it will help you sell faster, and for more money. If there are 100 houses like yours that have been sitting on the market for months, it will likely take longer to sell, affecting the price you can get.
Know How to Price Your Home
When I price a property for my client, I am very thorough in my research and will always price it for the current market conditions, not potential future market conditions. Be wary of someone trying to sell you something based on what “might” happen. When I price a property, I do it based on real-time evidence, not hopes and dreams.
Markets can shift, and sometimes quickly. I am used to working with real estate investors and people for whom every dollar matters, so I try to be conservative enough to ensure my clients are protected and secure. I’m proud to report that in my over 20 years of business, I’ve never sold a property below my quoted range. I have beaten the market, though—most of the time.
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Have Back Up Plan
If you decide to sell your property first, do you have a plan B? Once you sell your home, you will have a hard deadline for moving out. Part of the discussion in this scenario is knowing what happens if you don’t find a new house before your current house closes. Are you able to stay with family and friends temporarily and store your things? Is renting something short-term an option you can live with?
What is your financial position? How risk averse are you? These are important factors to consider as well. Some of my clients will be cash buyers and their purchase is not contingent on their sale. They will have the luxury of time on the sale side and can decide to wait for the spring market, for example, regardless of when they bought.
What’s Your Financial Situation?
Picky buyers with secure financial positions will usually end up on the buy-first side of the ledger. Some of my clients are downsizing for financial reasons and need to squeeze every dime out of their purchase to fund their retirement needs. Some people are risk averse and really need to know exactly how much money they will have before they are comfortable buying. Both those usually end up on the sell-first side.
Downsizing Your Home? I Can Help!
If you are wondering where you stand in today’s market and want an opinion of value, give me a call for a no-obligation evaluation of your home. I would be happy to discuss what is currently happening in your micro market to help you with your future planning and decision-making.
Looking for a Senior Real Estate Specialist to guide your downsize? I can help! Call 647.283.2127 or email me at stuart@stuartnodell.com to get in touch.
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