If you have a property to sell, you might be faced with a common predicament: ‘How do I know how much I can afford to buy if I don’t know what I can sell my current place for and, if I sell first, what if I don’t find a suitable property to buy’. So what should you do? If you currently own a home and are looking to make a change it’s best to meet with a Realtor to discuss your circumstances, what is prompting the move, where you would like to move etc. Generally, I recommend doing the most difficult option first. For example, in a seller’s market I would suggest that you buy first because it might take some time to find a house given our low inventory levels. Below are the advantages and disadvantages to each:
ADVANTAGES TO SELLING FIRST:
The luxury of time presents no stress to sell for an amount less than you find acceptable.
You will know exactly how much money is in your pocket to buy.
You will know exactly when the buyer gets possession of your home or condo (you can time the closing of your purchase to minimize the need for bridge financing).
You avoid the stress of not being able to sell.
DISADVANTAGE TO SELLING FIRST:
Pressure of not yet having found a place to buy and potentially having to make a rushed purchase.
If you decide on this route, the longer the closing the better.
ADVANTAGES TO BUYING FIRST:
You have spent all the time necessary to calmly find, negotiate and secure your dream home.
DISADVANTAGES TO BUYING FIRST:
You don’t know exactly how much your home will sell for.
Pressure of having to sell when having already bought.
If you decide on this route, buy with a long closing.
No matter which you do first, plan the timing of both your purchase and sale to occur in the same general time frame. However, each person/situation is different so it’s best for us to sit down and discuss a plan that works best for you as early into the process a possible. Contact me here to discuss.
BUYER OR SELLER’S MARKET In real estate there are generally three different kinds of markets: a buyer’s market, a seller’s market and a balanced market. Knowing the current market state is important as it affects pricing, supply and demand and negotiation opportunities. The various markets defined below: Buyer’s Market – when there are more homes (supply) than buyers Seller’s Market – when there are more buyers than homes available Balanced Market – when there is an equal number of buyers and sellers
Another way to look at this if by ‘months of available inventory’. If we were to take a snapshot of the available inventory at a specific time and NOT add any more listings, how many months would it take us to deplete the stock. Generally speaking: 5-7 Months of inventory is considered Balanced Over 7 months is considered to be a Buyer’s Market Under 5-6 months is considered to be a Seller’s Market
WHERE IS THE MARKET NOW? For the past few years, the Toronto real estate market has definitely been a seller’s market. With our low supply in the housing sector, low interest rates and higher population in the city, there has been an increase of buyers in the market.
HOW DOES THE MARKET AFFECT YOU AS A BUYER? Successful buyers have a plan. They are organized, responsive and understand that buying a home is a process of elimination. This is where I come in. I like to meet with buyers to discuss neighbourhoods, price points and key needs and form a buying strategy. With all the increased competition, buyers that have a plan and are realistic are generally the ones winning in todays’ market. I will also adapt our negotiation strategies based on what is happening exactly at the time, as there are many small nuances to winning in today’s market. Markets can vary in each neighborhood, contact me here and I can discuss the specifics of your preferred neighborhood.