Should You Sell First, Then Buy Your Next House?
By Jason Bell
If you have a house to sell, should you sell it before selecting your next house to buy? That is a question that Tess and I have been asked many times over the years. "Contingency sales" or buying a house but making it subject to your home selling first, (i.e. a "Sale Of Buyer's Home" condition) aren't very strong offers when compared to ones that come in from a ready, willing and able buyer that doesn't have to sell his or her home first.
Consider this scenario: You've found the perfect house - now you want to make an offer to the sellers. You want the sellers to accept your offer (probably at a price that's less than what they are asking), but you are also really hoping that they will wait until you sell your house. In some regions across North America, for the seller, this isn't a great situation since they might pass up a buyer who DOESN'T have to sell a house while they are waiting for you.
In Calgary, some sellers say OK, they'll do the contingency, because the rules of the Calgary Real Estate Board allow for a property to remain active on the market in the event of a contingency sale. However, many sellers decide that there is still some risk (eg. fewer showings if and when word gets out that there is already an offer on a property) & that the only way it's worth it is if they get full list-price for their house (i.e. the full price they were asking). Because of the contingency, you now have to pay more for the house than you could have negotiated if it were a typical transaction.
Secondly, you now have to sell your existing house quickly otherwise you run the risk of potentially losing out on the first house that you just put an offer on. So to sell quickly, you might accept an offer that is lower than if you had more time.
The bottom line is that buying before selling might cost you a lot of money.