It’s time to purchase your next home. But before you start packing the moving van, you need a strategy for selling your existing home and buying a new one.
An important part of this process is deciding whether to
• sell your property first and then submit an offer on a new home or
• place an offer on a new property and then sell your home.
Both strategies have advantages and disadvantages, and it’s best to choose one that fits you. I want to share two real-life stories to illustrate each strategy.
Sell first and play it safe
My family and I recently relocated from Burnaby to Langley, and when it came time to sell our place, we decided to sell first and then submit offers.
We started by meeting with our realtor, who assessed our home and explained the current real estate market. This helped us set our budget for our next property.
Our realtor also recommended listing our home and testing the market while the weather was good: It was late summer, and our neighbourhood was busy with people enjoying the warm sunshine. We decided the time was right. We listed our property on a Wednesday and held open houses that Saturday and Sunday.
During the open houses, we looked at property in Langley. We found a home we loved—I wanted to move in right away—but we weren’t comfortable placing an offer before accepting one on our home. We could’ve added a subject to sale, but sometimes, when choosing between similar competitive offers, a seller might avoid an offer with risky subjects, like a subject to sale. So by not placing an offer that weekend, we took a chance. We might not get the house we love. Yet that was our level of comfort.
Meanwhile, over 200 people attended our open houses.
As the next week began, we started receiving offers. By Monday at five pm we had six. We contacted the two best offers and asked them to sweeten the offers. Neither increased the price, but one submitted a new offer that was free of subjects. We accepted. And with the security of a subject-free offer we made an offer on the house we loved.
Buy first and don’t miss out on your dream home
Around the same time, a friend of mine was also looking for a new place. He had an open house the same weekend as ours, but not that many people came through. Yet he fell in love with a home and placed an offer on it—subject to the sale of his property. The seller accepted and he had 30 days to sell his house.
He held another open house, but still didn’t get offers close to his asking price. After a month, his place hadn’t sold and he had to make a tough decision: Remove subjects or risk missing out on his dream home. Despite a lack of serious offers, my friend remained confident. He knew he could get what he wanted for his place, so he decided to remove the subjects on his offer.
It took my friend another month to sell his home and, to pay for both properties, he had to get a bridge mortgage. This was emotionally and financially stressful, but he felt it was worth the risk and stress to get the place he wanted.
Buy first or sell first?
A lot of clients ask me if they should sell first or buy first. But there is no right answer. It depends on your level of comfort and financial flexibility.
Here are the advantages of selling first:
• You know your budget for your new place
• You can make your offer more attractive by not including a subject to sale
But when you stick to the sell-first plan, you might risk missing out on a property you love.
The main advantage of buying first is that you can place an offer on a property as soon as you want. You might have to pay two mortgages, but you won’t miss out. You could add a subject to sale, but if your offer is up against others, a subject to sale can make your offer seem less attractive.
A real estate offer is a legal contract
It’s important to remember that your offer is a legal contract, and its subjects are conditions that must be fulfilled for the contract to be completed. The most common subjects are subject to sale, subject to financing and subject to inspection.
It’s true that an offer expires if you don’t remove your subjects, but if the seller thinks you are using your subjects as an excuse, and that your true reason for backing out doesn’t align with the subjects stated in your offer, they have grounds for legal action. When you place an offer, take some time to consider what subjects to add so you can both protect your interests and make your offer as attractive as possible.
Professional legal assistance brings peace of mind
If you want to learn more about the best strategies for buying and selling property, or need legal guidance on any real estate transaction, contact Zancope Notary Public today. Our friendly professionals can handle all the paperwork associated with buying or selling property and offer the professional insight you need to navigate the complicated and often stressful world of real estate.
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