When is the best time to sell /buy a house in Toronto?

We all want to sell our house as high as possible. The question we may have in our mind is when the best time is to sell a house.  According to the Toronto Real Estate Board, the best time to sell is spring. It’s a time of renewal and change in general. From a buyer’s perspective, buying in the spring allows for a closing date early in the summertime, aligning with school and work breaks that make moving relatively easier.  

However, since the housing price in Toronto continued to increase over the past few years, you might already run into bidding wars and did not get your dream house due to high pricing in the spring market. Then, how about sell your house at off-peak season, let’s say in the wintertime.  As a seller, you may not sell your house for maximum $$$ you can get in the spring. But you probably can secure a good deal to buy your new house after you sell your current one in most cases.  There is a $35,000 price difference to buy a house in off-peak season on average.

The ideal case is that if you can buy your next house in the wintertime for a relatively lower price and set the closing date a little further out. Then start to sell your current house in the spring for maximum $$$. However, if you choose to purchase your new house before you sell your current one, make sure you consult with your bank or mortgage broker in advance as you might need an escape clause.  There are three mortgage options available in the market:

1.       Portable mortgage: transfer your existing fixed mortgage rate, loan balance and maturity date to your new mortgage.

2.       Assumable mortgage: an assumable mortgage makes your home more attractive to potential buyers by having them take over your mortgage and its existing rate. BMO Bank of Montreal can release you from any personal liability if your buyer meets BMO’s usual credit requirements and if your lawyer has completed the necessary paperwork.

3.       Bridge financing: the option can make sure that you have the funds to cover the cost of two mortgages when your closing dates don’t coincide. However, you need a lot of $$$ to pull that off because bridge financing at the bank is difficult to obtain without a buyer commitment for your existing home.  The banks will offer bridge financing about 2 percentage points above prime if the closing date for the sale of your house comes after your purchase date, but you have to have a committed buyer.

On the other hand, you have to prepare additional $$$ for the closing cost of your new house and/or when you need to carry both properties before you sell your current one.

If you choose to sell first, it comes with the risk of not finding something in the right neighborhood. The reality is no matter you choose when to sell/buy a house or whether you want to sell the current one first or buy a new one first, it always comes with pros and cons for each choice.

To sum up, it’s up to you to decide when is the good time to sell the house taken into account of your situations.