Depending on your moving timeline, finances, and market conditions of your current and future homes, you should decide what to do first: buying or selling a home. Selling first usually benefits people who sell houses in buyers’ markets, and buying first benefits people who sell houses in seller’s markets. Selling and buying at the same time is possible, but it’s pretty unlikely.
So, is it better to sell your house before buying another, or is it better to do it the other way around? Let’s see the pros and cons of each option:
Is it Better to Sell Your House Before Buying Another New Place?
For most people, this sounds like the most practical solution. If you need to access your current home equity to buy a new place, this option is beneficial. However, while buying your new home you’ll need temporary housing, and you’ll look to sell your home fast.
– Avoid a rushed home sale: You can wait until you get a satisfactory offer without the pressure of buying a new house.
– Make a stronger purchase offer: When buying in a seller’s market, your offer might seem less desirable while making an offer contingent upon your own house.
– Know your sale profit: You can adjust your affordability and shop within budget after selling your current home.
– Pay only one mortgage: Having an existing mortgage can make it hard to qualify for a new one.
– Stage your own home: You probably won’t need to hire any service to get your home ready for listing as your belongings are still in place.
Why Not Sell First?
There are some disadvantages to selling your current house first. For instance, it could be overwhelming to live in your home while listing and showing. There could also be logistical challenges if you don’t buy and close on a new place during the 45-day closing window of your current house. Is it better to sell your house before buying another? According to the following reasons, it isn’t better:
– Rushed home purchase: You can feel pressured to make your next purchase.
– Cost of temporary housing: It could be expensive, but you could stay with family or friends to reduce costs.
– Moving twice: This is probably the biggest inconvenience as it’ll be more overwhelming and costly than doing a single move.
Tips to Sell First
– Request a lease-back: To prevent moving twice and get temporary housing, request the buyer renting your home for a few months.
– Sell through online offers: You have more control over your timeline and you could get a cash offer after evaluating your home’s condition. Do what’s best for the home closing process of selling your house and avoid gap housing expenses by picking a closing date that aligns with your new purchase.
Buying or Selling a Home: Why Buy First?
When having the financial security to own two homes at once, buying first is the best option to avoid multiple moves.
– Avoid a rushed home purchase: You can take your time searching for the right property if you haven’t listed your home on the market yet. You won’t have to spend on temporary housing either.
– Secure the home you love: It’s possible that you’ve already found your dream home if you’ve been searching for a while.
– Control your moving timeline: You can give yourself enough time to pack, organize, and move.
– Only relocate once: You can move to a new place only once rather than moving to a temporary home and then to the new one.
– Skip inconvenient selling tactics: You’ll avoid the hassle of leaving the house every time someone wants a tour and you can hire a company to stage and decorate the place.
Why Not Buy First?
Even if you can afford it, buying a new place first isn’t for everyone. As it depends on market conditions, it could take months for you to sell your current home. Also, consider you’ll be too busy trying to make a sale to be thinking about what to buy for a new house.
– Rushed home sale: Avoid falling into mortgage paying trouble and urgency to get a new place due to making two mortgage payments per month.
– Financial strain on two mortgages: You might need cash for your down payment or to cover out-of-pocket expenses like staging and moving.
Tips to Buy First
– Apply for a bridge loan or HELOC: You must maximize cash flow if you’re interested in buying a new place before selling. So, to pay for a new down payment, you could take out a temporary bridge loan or HELOC.
– Sell through online offers: Instead of waiting to get a traditional offer, you can sell directly to the website for cash. After analyzing your home’s condition, you’ll receive a market value offer.
– Considering leasing your home: You can rent your home and wait for market conditions to be better if money gets tight.