Sell First or Buy First When You Downsize in Markham

The short answer

Almost every downsizing move comes down to one decision made early: do you sell the family home first or buy the smaller place first? Everything else, the budget, the timeline, whether you need bridge financing, follows from it.

Most downsizers we work with sell first. The reason is simple. The family home is usually worth more than the next one, so until it sells you are guessing at your own budget. Selling first replaces the guess with a number.

Buying first is the right call in a narrower set of cases. It is not reckless when the conditions are right. This post walks through both orders honestly, including what each one costs you. Our Markham downsizing guide covers the wider picture of costs, areas and timing.

Selling first: a known budget and a stronger hand

When your sale is firm, three things change.

You know your real number. Not the estimate from an online tool and not the number a neighbour got two years ago. You know what your home sold for. After your mortgage payout, commission, legal fees and any deferred property tax, you know what you are walking away with. That figure is what you actually have to spend.

You negotiate from strength. A downsizer with a firm sale is close to a cash buyer. You do not need a financing condition tied to a home that has not sold. You can also offer a closing date that suits the seller. In a building where several units are for sale, that flexibility is worth real money.

You stop making decisions under pressure. This one is harder to put a price on. It also matters most. People who buy first and then have to sell tend to accept the first reasonable offer, because the alternative is carrying two homes. That is the worst position from which to price a home you have owned for thirty years.

The obvious cost of selling first is that you now have a closing date and nowhere confirmed to go. That is a real problem. It is solved with the closing date itself rather than with luck.

How the two closings actually line up

The lever most people overlook is the closing date, which is negotiable on both transactions.

A typical downsizing sequence looks like this. You list and sell with a longer closing than usual, ninety days rather than sixty. That gives you a window to shop with a firm sale behind you. You then buy with a closing date a few days before your sale closes, so you can move out of the old house into the new one without a night in between.

Closing the purchase slightly before the sale is the common arrangement. That gap is what bridge financing exists to cover. If the purchase closes on the fifteenth and the sale closes on the twentieth, you need the purchase money for five days before your sale money arrives.

Bridge financing covers exactly that gap. A few things worth knowing:

• Lenders generally want your sale to be firm before they will commit to it. A conditional sale is not enough, because the whole point is that the money is certain to arrive.
• It is priced as a short term loan with a set up fee plus daily interest, so a five day bridge and a sixty day bridge are very different costs.
• It is arranged through your lender and your lawyer together. Raise it with both of them early rather than in the final week.

Ask your lender for the terms in writing before you rely on a bridge. What you are checking is whether they will lend, on what condition and at what cost.

Buying first: when it is the right call

Buying first makes sense when what you want is genuinely hard to find. A ground floor unit in one specific building. A bungalow in a pocket where two come up a year. A condo in the same neighbourhood as your daughter. If you wait for a firm sale before you look, the one you wanted may be gone.

If you go this way, go in with your eyes open:

• Have a written plan for carrying both homes for at least three months. Two mortgages, two property tax bills, two sets of utilities and insurance on a vacant home.
• Get a realistic read on your own home before you commit, not after. What has actually sold on your street, in what condition, at what price and how quickly.
• Negotiate the longest closing you can on the purchase. Ninety or a hundred and twenty days on the buy gives your sale room to breathe.
• Understand that you are accepting price risk on the sale. If the market softens while you are exposed, you absorb it.

The version of buying first that goes wrong is the one where the decision was never really made. Someone sees a place they love, buys it and works out the sale afterwards. Our post on what it costs to downsize in Markham sets out the carrying costs that decision commits you to.

The third option: sell, rent, then buy

Selling and renting for six months or a year gets forgotten and for some downsizers it is the best answer available.

It suits you if you are not certain where you want to end up, if you are considering a move closer to family in another part of the Greater Toronto Area or if you want to try condo living before you commit your capital to it. It removes every timing problem at once, because you buy with no deadline and no property to sell.

The costs are honest ones: two moves instead of one, storage for whatever does not fit in the rental and the risk that prices rise while you are out of the market. For people whose main worry is making the wrong decision quickly, that is often a price worth paying.

How to decide, in three questions

How flexible is your destination? If you would be happy in any of six buildings, sell first. If only one will do, buying first deserves serious thought.

How much of the next home does the sale have to fund? If the purchase depends on the sale proceeds, sell first. If you could buy without the sale, you have the freedom to choose.

What happens if the sale takes three months longer than you expect? Answer this in dollars. If the answer is uncomfortable, that is your answer on the order.

There is no universally correct sequence. There is a correct sequence for your home, your destination and your tolerance for carrying two properties. Before you decide either way, it is worth knowing what your home is genuinely worth today, which is where a free home valuation comes in and worth reading the senior downsizing checklist if this move involves a longer held family home.

When you are ready to talk it through, we will tell you which order we would choose in your situation and why. Sometimes the honest answer is that this is not the year to move at all.