Movin’ On Up: How to Buy Your Next Home When You Already Own One

Every week, Nick answers a Redditor’s question about buying, selling, renting, investing, or living in Ottawa. Send Nick your own questions on the website, on Reddit, or in a YouTube comment!

Nick’s Response

This isn’t a dumb question at all, and it’s one that comes up for anyone buying a home while living in one they own. Here are some notes:

• If you are planning to work with a mortgage broker and Realtor, get them involved early. They will be able to help you make sense of what you can comfortably do financially and what the market is like in your city/neighbourhood. Information and context will help you make the right decision for you.

• The Canadian Real Estate Market is not homogeneous. Some commenters in this thread are saying “it’s a Buyer’s market, do this” or “it’s a Seller’s market, do that.” This kind of advice lacks the context of your specific situation and is irresponsibly given. Here in Ottawa it is currently a weak Sellers’ market, but I suspect it will be balanced by summer, and parts of the city already behave like Buyers’ markets. That’s in one city, to say nothing of what it might be like for you in a different part of the country.

• You might consider purchasing your next home with a condition of first refusal, that is to say a condition of the sale of your existing home. This gives you a certain amount of safety and security, but comes with potential downsides: one, that it can be very hard to find a Seller that will accept this condition, depending upon your market and two, that you’ll pay a premium to get the condition accepted.

• whatever route you take, prepare as well as possible so that you can make informed, decisive moves when needed. On the purchase side, this means getting clear on your needs,wants and dealbreakers lists, budget and scout with your Realtor to know what homes are available and what they’re selling for. On the sale side, get an accurate valuation of your home, staging advice, do touch-ups and repairs so that your home will have as few hurdles to selling as possible.

Generally speaking, there are two approaches you can take:

Sell first, then buy:

• Risk: not having a home or getting forced to choose a home that’s not ideal when the closing on your home is looming.

• Works best when there are a lot of suitable homes available for you to buy

• Works best in Buyers’s market conditions

• Works best if you have family that you can stay with or short-term rental available if your current home closes before your next one

Buy, then sell:

• Risk: owning two homes and carrying two mortgages while you try to sell your current home

• Works best when you are looking for a specific home and your current home is appealing to a large pool of Buyers

• Works best in Sellers’ market conditions

• Works best if you can negotiate a long closing (90+ days in many markets) on your purchase so that you have time to sell your home, and/or purchase with a first refusal condition

• Works best if you know you are financially safe to carry two homes for a period of time if you need to.

I hope that helps clarify things a bit. All the best on your move!