One of the most common questions we hear from Vancouver homeowners who are interested to move is “should we sell first or buy first?”
There is no perfect solution, so you have to choose a strategy that works best for your personal circumstances and comfort level.
If you sell first, you run the risk of not finding something to buy and having to rent for a while. If you buy first, you run the risk of not being able to sell your Vancouver property quickly and getting stuck with two real estate properties for a while. Some people say they could not handle the stress of being out the market, and others say they could not handle the stress of owning two homes at the same time – it really varies from person to person.
For example, we recently worked with a homeowner in Kitsilano who sold her home first and is renting while she looks for a larger property to buy because she absolutely did not want to take the risk of owning two properties at the same time. On the other hand, a downtown Vancouver owner made the decision to buy first because he believes it’s more difficult to buy than sell in the current market so he would rather chance owning two homes for a short time than find himself out of the market. It’s a very personal decision that every individual has to make for him/herself.
Another important consideration is that the market could change. Nobody has a crystal ball; in a few months the market could change from a seller’s market to a balanced market, which could increase the length of time it takes to sell a home in the Vancouver area.
Nevertheless, homeowners successfully are selling and buying in this market, and you can too.
A large part of Vancouver’s real estate market is comprised of homeowners that are either upsizing or downsizing. Our clients have used all of the following scenarios with success:
1. Simultaneously buy and sell with corresponding move-in/out dates. Although it’s almost impossible to actually buy and sell in the same week, you can at least try to make the move-in/out dates for your sale and purchase correspond. For example, we have assisted many home owners to purchase properties with long completion dates to allow them time to sell their existing homes with the same move-in/out dates. As an example, we helped a retiree purchase an ocean view condo just two blocks from English Bay in the West End and then quickly sold her condo in Kitsilano with corresponding move-in/out dates. Of course, she took a small risk of not selling her place, so she had financing lined up for the new property just in case.
2. Sell your existing home with long completion dates so you have time to find a new home. In this scenario, you sell your home with completion and possession dates that are 60-90 days out and then search for a new home and try to line up the dates as much as possible. We’ve had many clients choose this strategy, including a couple who sold their large home in the suburbs before searching for their dream retirement townhouse near Kitsilano beach. Of course, there is a risk that you may not find a property before completion and could end up renting for a while.
3. Sell your existing house or condo with short completion dates and rent back for 3 or more months while you find a new home. By having short completion you get paid quickly and have cash on hand to help you negotiate a good deal on a new property, while in the meantime renting back in the comfort of your existing home.
4. Sell your existing home in Vancouver and rent somewhere temporarily while you find and buy a new home. While you take the risk of not finding anything quickly to buy as prices creep up, the upside is that you will have cash ready so you are able to jump on a good deal when you see it.
5. Use the equity in your existing home to secure financing to buy the new property and then immediately put your existing property on the market. This works well if you are downsizing and have a lot of equity in your existing home. We have several Kerrisdale, Shaughnessy, and Point Grey retiree clients who have done this successfully. Of course it means you will likely own two homes for a short time, and there is a risk that you may own two homes for longer than expected.
6. If you don’t have enough equity in your home, you can use the potential rental income in your existing home to quality for a mortgage on a second home. After buying the second home, you can choose to sell or rent your existing home. Of course, in this scenario will own two homes for a period of time, so you have to be comfortable with that scenario.
7. Once you have an accepted offer on your home, use bridge financing to buy the second. Once you have an accepted offer on your home, most banks will approve bridge financing on your new home subject to qualification.
8. Obtain private extended financing to buy the second home while still owning your existing home temporarily. This is like bridge financing except you don’t necessarily need an accepted offer. We have one client that recently did this successfully. Again you may own two properties for a period of time and you could pay up to 10% interest per annum for the extended financing.
9. Put your house on the market subject to buying. When you receive offers, you would counter offer with a condition that says you have two weeks to secure an accepted offer on a new property otherwise the whole deal is off. This seems a bit extreme but this is being used successfully right now because we are in a seller’s market. In the cases where I’ve seen this, the sellers were able to secure accepted offers on new properties and the real estate transactions were completed successfully.
10. Make an offer subject to selling your property. In this market, sellers are not keen to wait for buyers who need to sell, but if the price is right then they may consider accepting your offer with a time clause which means that if they get a second offer that is better they can give you 48 hours to remove subjects.
Ranked in the top 10% of Vancouver realtors, our team has substantial experience working with sellers. We will work with you to create a strategy that will bring you the maximum exposure and highest price for your home. We have worked with sellers all over the west side and east side of Vancouver, from Kerrisdale, Point Grey, and Kitsilano to Main, Grandview, and Hastings to help them get the very best price.
*Written by Annette Saliken, YourHomeTeam with Sutton Westcoast Realty – 2015