Should You Close on the Same Day? With Stephany Watson

Closing dates can be tough - making sure that you have a solid plan around when your property, and the property you’re buying, close can help you deal with the added stress. Let’s dive into why this is so important.

If you’re buying a property in Ottawa, you may be concerned about your closing dates! A great real estate agent can help you, with the assistance of your mortgage advisor, to figure out the best strategy for you, your financial situation, and your current/dream home.

Stephany explains, it is always risky to buy and sell on the same day, and she doesn’t advise it. This is because we are at the mercy of the buyers to get us funds in order to make our own purchase. The buyer has until 5pm on closing day to provide the funds, but as buyers, we will also only have until 5pm that same day to provide them to the seller of the new home.

Therefore, if the buyers aren’t early with delivering their funds to us, we may be late and risk losing the sale to deliver the funds to our sellers.

There are three options for closing dates:

Option 1:

Purchase a few days before your own sale, and arrange for bridge financing to fund the gap between the two deals. This also allows you a few days to move between properties as well.

Bridge financing is a temporary financing option designed to help homeowners with the gap between their sale and purchase. This uses equity on your current home for the down payment on your next one.

These loans typically last 6 months, but can extend beyond 12 months. To qualify for one, you must already have a firm sale agreement on your current home.

These types of financing are most common in hot markets where bidding wars are common. This helps you make a quick decision about your dream home, without worrying if your current home has sold. When you do sell, you can then pay off the bridge loan and interest using the proceeds of that sale.

Option 2:

Have your sale close the day before your purchase, or earlier. This way, you have the money from the sale ready for the purchase day. However, you’ll need to find a place to live in between the gap where you have no property.

Option 3:

Close both deals on the same day and hope for the best. This is risky, and not advisable, but can be done.

Stephany Watson

stephany@newpurveyors.com

613 324 3717