Estimated reading time: 8 minutes
One of the most common questions homeowners ask is whether they should buy their next home before selling their current one. Or, the other way around? In markets like Guelph where inventory and competition fluctuate, the answer depends on a few factors. This includes your financial situation, risk tolerance, and the current housing market conditions.
So, let’s go through it, shall we?
What Does “Buy First or Sell First” Mean?
Let’s say you currently own a home. It’s a condo in a South Guelph neighbourhood. You bought it as your first home in 2017 when you were single. Fast forward to 2026 and your life has changed in those 9 years- now you’re married with a toddler and need more space. We see this all the time!
So, you invite us over to talk about your options. You’re not sure of how the process works: do you put the condo on the market first? And then when it sells, you go and buy something?
Or, do you find your “forever home” first? And then wait until you have a conditionally accepted offer on it before putting your condo on the market? The short answer is that both of these options are common, but there is no true right answer. This is because there is (very small) risk in both and depending on your risk tolerance, you’ll probably prefer one over the other.
Pros of buying before selling
1. You Secure Your Next Home First
This is the biggest one. One of the biggest advantages of buying before selling is that you can find the home you really want without worrying about finding something quickly after selling.
If you consider yourself “particular” or have a specific type of house that you need/ require, this is a key reason why many people buy first.
2. No pressure to make decisions quickly
Buying before selling allows for you to take your time and figure out what it is you want, without the stress of feeling under a timeline. You can browse houses, negotiate and find the perfect house for you. All of this would be done before you need to list your home.
3. Longer closing date
Buying first gives you greater flexibility with your timeline. Instead of rushing to buy a property after selling, you can find the right home and coordinate closing dates. In the case of buying first, we usually advise clients to request a longer closing. This is especially true if they need funds from their current home to pay for the next one.
Cons of Buying Before Selling
1. You may be less competitive than others
In todays market, it is common to have a Sale of Property condition (SOP). This allows you to buy your new home only under the condition that they allow you to sell your existing home in a certain timeframe.
However, sellers don’t really like this and may even reject your offer, especially if the home has been on the market a short time. Even if they do accept your offer, they’ll likely want an escape clause so that they can continue to show it to interested buyers. This would allow them to accept another offer and potentially “escape” yours.
2. Financing Can Be More Complicated
Most buyers get pre-approved before looking for a new home. This tells them what they can afford to buy based on their current income. Additionally they estimate their current home is worth. If buying before selling, it’s possible that their existing home won’t sell for what they want. Therefore, the finances won’t work out. In this case, the purchase could fall apart and it makes for heartbreak. This is especially true if the market shifts while you are trying to sell your existing home. This can affect your budget and the overall financial plan for your move.
A good way to avoid this is to have a valuation done on your existing home before even offering on a new home to better understand your financial position.
Additionally, some buyers need the equity from their current home to purchase the next one. Buying first may require bridge financing if the closing date of your new home and then eventually your existing home don’t line up. Ensure that you talk to your lender about this, as it can be expensive.
3. You need to get your existing home on the market- quickly
If you’ve already purchased your next home, it can be more challenging to properly prepare your current property for the market. In some cases, there may even be a contractual obligation by the seller of your new home to have your home on the market by a certain date (or even a certain price).
And, as mentioned earlier the seller will likely give you 30-60 days to sell your existing home. So, you want to have it ready to list immediately after getting your offer accepted. Home staging, decluttering, cleaning and a plan for your existing home are all things that you should discuss with your Guelph real estate agent prior to pursuing a new one.
Pros of selling before buying
1. You Know Exactly What You Can Afford
This is the biggest reason people sell first. Selling your current home first gives you a clear understanding of your available equity and budget. Once the sale price and closing costs are known, it becomes much easier to determine what price range to shop in for your next home.
2. You Avoid Carrying Two Properties
By selling first, you eliminate the risk of owning/ paying two mortgages at the same time. This can reduce financial stress and make the transition to your next home more predictable. This is especially important if you are the type of person who loses sleep over financial risk (many do!)
3. You Have Stronger Negotiating Power as a Buyer
When your current home has already sold, you can make offers without a sale of property (SOP) condition. This often makes your offer more attractive to sellers. In competitive markets, this can significantly improve your chances of securing the home you want.
On top of that, most buyers expect a sale of property condition. As a result, you’re likely able to negotiate a better price as well.
Cons of selling before buying
1. You May Feel Pressure to Buy Quickly
Once your home is sold, you typically have a fixed closing date. If you haven’t purchased your next home yet, you may feel pressure to find something quickly. This may limit your ability to wait for the right property. This is especially tough if you are someone who needs a specific type of property. As a result, you are at the grace of what’s available on the market.
2. It may take a while and be a little inconvenient
In today’s market, houses aren’t really flying off the shelves. You should be prepared that your home will be on the market for 30 days or so. Of course, during that time it’s possible that you’ll even miss your dream home if it hits the market while you’re trying to sell.
Additionally, when you do sell, the closing date on your existing home may not line up with the purchase of your next property. This can mean renting short-term accommodation or moving twice, which adds inconvenience and extra costs in bridge financing.
3. You may not get the same deal on your purchase
Depending on what you’re selling, the terms of selling your existing home may not be the same as your purchase. As an example, you may end up receiving a sale of property condition (SOP) on your existing home. This is what you were trying to avoid on your purchase. This drags out the whole process while the buyer of your existing home prepares and lists their home.
Additionally, depending on what you’re selling vs buying it may be a different type of market. If you read our Guelph real estate market updates you’ll see that it’s easier to negotiate a better deal on condos, for example. Although you may be willing to negotiate, the buyer of your new home may not.
What’s best for you?
As much as we’d like to just give you the answer, we can’t. There is no right or wrong answer for what works best for your situation- only you know.
However, given the current market what if we had to choose the best option? It would be to sell first. This is because we believe it’s less risky and offers a competitive advantage when you buy. It may even get you a better price!)
If you have any further questions on the Guelph real estate market, get in touch!
FAQ
Whether you should buy before selling depends on a variety of factors. Buying first can help you secure the home you want, but it may require carrying two properties temporarily. Selling first provides financial certainty but can create pressure to find your next home quickly.
Buying before selling can involve financial risk. However, there are ways to protect yourself, including adding a Sale of Property (SOP) condition.
The time it takes to sell a home in Guelph can vary. This depends on market conditions, pricing strategy, and the type of property. Typically, we would advise clients to expect 30 days on market.
Yes. Buyers often have more negotiating power and may feel less pressure to make quick decisions. However, sellers may not want to agree to the buyers terms and conditions which requires further negotiations.
The best approach depends on several factors. This includes your financial flexibility, the amount of equity in your current home, and current market conditions. Speaking with an experienced local real estate professional can help you form a strategy that works for you.