Buy Or Sell First?

March 7, 2008

newtownhouse2.jpg Buy or sell first when you are planning to make a move?

If you wish to move from your present home, you need to free up your equity as down payment for the home you wish to purchase. This may be a complicated process depending on your financial status.

If you do not have a high equity, you are unlikely to keep the current home as a rental/revenue property, and the new purchase as your residence. Your debt load may be too high to meet the bank’s lending debt servicing guidelines to carry 2 mortgages.

You need to discuss your move with a Mortgage Broker or your bank on your plan. You should:

  1. Research the market and be realistic with what you can afford. You have to figure out how much equity or down payment you can provide from the sale of your home. It is better to be more conservative in estimating your selling price than too optimistic with your projection.
  2. You also need to know how much loan you can be approved. If the home you plan to purchase has a suite as mortgage helper, you may be able to get a higher loan. Not all mortgage lenders apply the same rules on suite rental income to determine the maximum loan you can be approved.
  3. Sell your home first, or time your purchase only after you have received a firm offer on your home. Otherwise, you could be committing to a contract you cannot fulfill. Sometimes, in desperate situations, home owners are forced to sell their homes for less.
  4. Price your home right for the market, and ask for your Realtor’s advice. You work with your Realtor to evaluate the market and price the house accordingly. It is possible to minimize your risk when buying or selling a home if you are working with an experienced Realtor.
  5. Making an offer subject-to you selling your home is not well accepted in the market place. This limits your ability to negotiate a good price from the seller.
  6. If you are buying and selling at the same time, you should consider renting your current home for a time after closing if the completion date of the new house is later than the home you are selling.

Working with a local experienced Realtor, whether selling or buying, is very important.

Kindly contact me (Elsie Tse) at 604-716-3369 or Email Me 

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