The short answer is NO, not unless you can afford to buy your second property outright, or have a pre-approval that will allow you to carry two properties. Even then, there are some reasons now to do so.
The fear of not finding a new home is common, especially in this market. Everyone who sells goes through it unless they’re moving out of the area, or are planning on renting. But what would happen if you purchase a new home without first having your home sold? In today’s market you cannot go into a purchase subject to the sale of your home. Also, after your home has been sold the right home always seems to come on the market. Call it fate, or whatever you like, but things always seem to work out when you go about the process the right way.
Here is a recent story that stresses why it is so important to make sure that your home is sold before you make a purchase:
Dan had another agent come to him for advise as her client had purchased a townhouse before selling. She paid well above the asking price for the home as she was in multiple-offers. The home she purchased also had a quick closing of a month and a half. This same client then put her home on the market and managed to get an offer fairly quickly; however, the offer on her property fell apart due to financing before subjects were removed. No other offers came quickly, and the house needed a price adjustment. However, with the price the client paid for the townhouse she purchased she was unable to adjust the price of her home as she needs every dollar in order to complete her townhouse purchase.
The client explored financing options with her bank, but they were unable to extend her any financing without her home being sold. She reached out to a mortgage broker and is waiting to find out whether he will be able to help her with financing. If he can’t, the client’s purchase may fall apart and she may have to forfeit her deposit.
Even if things work out in the end, what a headache and a lot of undue stress.
The moral of the story is you should ALWAYS sell your home first.
What We Can Do To Help Relieve Some Of The Fear And Stress Of Selling Before You Buy
There are multiple ways to approach the situation of selling before you buy:
- Longer completion and possession dates to allow you time to find a new home
- A rent-back clause to allow you to remain in the home for a certain amount of time while paying the new owner rent
- A date adjustment clause – this is a custom clause that allows the seller to move the date for completion and possession on a certain amount of notice and up to a certain point
These are just some of the ways that we help to protect our clients.
One final point – even if you are looking online now for a property and don’t see anything, don’t fret. Properties come and go constantly. The most important thing is making sure you are in a position to act on the right property when it does come available.