Buying & Selling Your Home. What Should Come First?
How to Buy and Sell a Home at the Same Time: Which Should Come First?
If you're planning to move, one of the biggest challenges is deciding whether to sell your current home before buying a new one or vice versa. Both approaches have their own benefits and potential drawbacks, so making the right choice depends on your financial situation, market conditions, and personal timeline.
Should You Sell Your Home Before Buying a New One?
Selling your current home before purchasing a new one is a common approach because it reduces financial risk and provides a clearer budget for your next purchase.
Pros of Selling First
Financial clarity. Once your home is sold, you’ll know exactly how much money you have for your next purchase, making it easier to determine your budget.
Avoiding two mortgages. Carrying two mortgage payments at once can be financially challenging. Selling first ensures you don’t have to manage double the expenses.
Stronger buying position. Since you won’t have to make an offer contingent on selling your home, sellers may find your offer more attractive, especially in a competitive market.
Cons of Selling First
Temporary housing dilemma. If you haven’t secured a new home before selling, you’ll need a temporary place to stay, whether that’s with family, in a rental, or in short-term housing.
Moving twice. Selling before buying means you’ll likely need to move twice—once to temporary housing and again to your new home—adding stress and extra costs.
Should You Buy a New Home Before Selling Your Current One?
Buying a home first can be an attractive option if you want a smoother transition without the stress of temporary housing. However, it does come with financial risks.
Pros of Buying First
Only moving once. Purchasing before selling allows you to move directly from your old home into your new one, avoiding the hassle of interim housing.
No rush to buy. Without the pressure of an impending home sale, you can take your time finding the right home that fits your needs and budget.
More flexibility with your move. Since you don’t have to leave your current home by a specific deadline, you can plan your move at a more convenient pace.
Cons of Buying First
Managing two mortgages. If your current home doesn’t sell quickly, you could be stuck paying two mortgages at once, along with additional costs like property taxes, utilities, and insurance.
Uncertain budget. Without selling your home first, you won’t know exactly how much you’ll have to put toward your next purchase. This uncertainty can make it harder to confidently plan your home-buying budget.
Risk of a delayed home sale. If the housing market slows down or your home doesn’t attract buyers right away, you could be in a tough financial spot while carrying both properties.
Challenges of Buying and Selling a Home at the Same Time
No matter which approach you choose, navigating both transactions at once can be complicated. Here are some common challenges to consider.
Limited Buying Power
If you're relying on proceeds from your home sale to fund your next purchase, your buying power may be limited until the sale is finalized. In a competitive market, sellers may prefer buyers who don’t have sale contingencies, making it harder for you to secure a home.
If you decide to buy first, your existing mortgage could impact your debt-to-income ratio, making it harder to qualify for a second mortgage. You might also need a bridge loan to help finance the gap between buying and selling.
Coordinating Home Showings While House Hunting
Selling a home while searching for a new one can be overwhelming. You’ll need to keep your current home clean and ready for showings while also scheduling time to view potential new homes.
To make things easier, coordinate with your real estate agent to schedule showings efficiently. Consider grouping home tours into specific time blocks and using scheduling tools to stay organized.
What Happens if Your Home Sale Falls Through?
If your home sale doesn’t go through as planned, it can cause financial and logistical headaches. Without the expected proceeds, you may struggle to move forward with your new home purchase, which could put your deal at risk.
Having contingency plans in place is crucial. Some options include negotiating a lease-back agreement with your buyer, applying for short-term financing, or adjusting your home’s pricing strategy to attract more offers.
Tips for Selling Your Home Quickly Before Buying
If you decide to sell first, you may want to speed up the process to minimize your time without a permanent home. Here are some strategies to help.
Consider Selling to a Cash Buyer
Selling to a cash buyer can be a quick and hassle-free option. Cash buyers often close within weeks and typically purchase homes as-is, saving you time on repairs and negotiations. However, it’s important to weigh the pros and cons, as cash offers may sometimes be lower than market value.
Work With an Experienced Listing Agent
A skilled real estate agent can help price your home competitively, market it effectively, and attract serious buyers quickly. Look for an agent with a strong track record in your local market.
Be Strategic With Repairs and Upgrades
To make your home more appealing to buyers, focus on cost-effective improvements that offer the highest return on investment. Simple updates like fresh paint, landscaping, and minor kitchen or bathroom upgrades can make a big difference.
Creating the Right Timeline for Buying and Selling
Deciding whether to buy or sell first depends on your financial situation, the housing market, and your personal priorities.
If you want financial certainty and less risk, selling first may be the better option. If convenience and flexibility are more important, buying first might be the way to go.
Ultimately, working with a trusted real estate professional can help you develop the best strategy for a smooth transition to your next home.
