When you buy and sell a house at the same time, you probably would like to
Most people also would unknowingly value higher on their existing home than the actual market. However, in reality, it varies with your individual circumstances, priority, risk aversion, and luck.
The current market situation and your estimation on the market trend
Different markets require different approaches
In a buyer’s market, selling first may be a better option. You certainly would not like to carry 2 mortgages at the same time or face the challenge of selling below market.
In a seller’s market, buying first may be a better alternative. Your home may easily be sold if the market trend is unchanged. In addition, you may get the premium on the price increase in the new home and the current home may sell high later on.
However, if the market changes, no longer in line with your expectation, the appealing options could double your pain. To lessen the lag between either the sell or purchase could reduce the risk accordingly.
Statistically, in recent years, the housing market is seasonal in Toronto, Ontario, it shows patterns as starting low from Nov to Jan, ramping up until June, then gradually cooling down. Your buying and selling should be adjusted accordingly. However, the epidemic reshaped the chart dramatically with a lot of unpredictability across Canada.
Different types of property may move variously in the direction and pace even under the same whole market. For example, the condo market may perform differently from the detached property. There may be a time lag or move differently if both property values have a vast difference.
If the loss or risk aversion means a lot to you, selling your current home first may be an optimal choice for you.
If the stress of having a limited time to buy a new property is unacceptable to you, then buying first would be better off.
Financial security and capability. If financially allowed or you don’t have much financial stress to carry 2 properties, you could buy a dream place first.
If due to the family needs such as avoiding moving or an urgency to buy a house in a specific neighborhood for kids schooling, you are better off to buy a home first. If due to the relationship change, selling first and fast may become the first priority.
Where to stay if you sell first?
How to handle your cumbersome belongings such as furniture, etc
Where to put the money if you have sold your place first
Possible mortgage penalties if you couldn’t port your existing mortgage to the new property within the permitted time period, commonly at 90 days.
Are you able to handle the worst case when you have bought the new one but couldn’t sell the current one?
You find a dream house and get a great deal, and you are financially capable, you probably would buy first
You move from a lukewarm or stagnant market to a hotter market, you probably would sell first. Vice versa, your decision may lead to buying first.
If you have a clear target or priority which overweights other factors, then choose the appropriate decision accordingly.
If handling a potential 2 mortgage may overstress you, then sell first.