When you see that perfect property that has everything you’ve ever wanted go up for sale, it can be tempting to put in an offer before putting your own home on the market. But is it the right thing to do? Putting an offer in on a new home before selling your existing home can cause a great deal of anxiety, especially when your house isn’t getting quite as much interest as you thought it would. In this article, we discuss what you should consider when choosing to purchase a new home before selling your existing home, and how you can eliminate some of the anxiety.
Consider the Type of Market
When choosing to put in an offer on a new home before selling your current home, it’s important to consider the type of market that you’re currently in. If you’ve been advised that your current home is in a seller’s market and will get snapped up quickly, then purchasing a new home first may come at little to no risk to you.
The balance tells us more on why knowing the current market state is so important:
“If the home you’re buying is also in a seller’s market, keep in mind that few sellers will accept a contingent offer. For example, you might want to make your new home purchase contingent on your current home selling, but there’s no reason for a home seller to accept that offer if they have other buyers waiting in the wings. The best route is not to put in that contingency, but that means you could be stuck owning two residences until your home sells.”
Consider Including a Contingency
Really want that new home but don’t want to take any kind of a risk? Then consider including a contingency that your offer is only good if your current home sells. Keep in mind that if there has already been a ton of interest in the home you are looking to buy, odds are the sellers are not going to go for this.
RBC Royal Bank explains the positives and negatives of this type of contingency:
“In a buyer’s market, when making an offer on your new home you could include a contingency in your contract stipulating that your offer to purchase stands only if your current home sells. However, in a hot seller’s market, conditions will generally make an offer less attractive to a seller because of the potential uncertainty of the transaction.”
Consider a Bridge Loan
Last but not least, considering a bridge loan is a great idea if you simply can’t wait to purchase that new property. A bridge loan takes a certain amount of the risk out of taking that leap of faith, but keep in mind that these are normally only short term loans.
Which Mortgage tells us more about what bridge loans entail:
“A bridge loan is a temporary loan option designed to assist homeowners “bridge” the gap between the time their current dwelling is sold and their new home is purchased. This loan type enables homeowners to use their current home’s equity to pay the down payment for their next house while waiting for their existing home to sell. Bridge loans are short-term loans, usually six months in length.”
Are you ready to put your home on the market? Book a free market assessment with us today! With over 30 years of experience representing buyers and sellers in the British Columbia market, we can help you put your home on the market and find the perfect property for you. Contact Cascadia Pacific Realty, Ltd today to get started!