Deciding whether to sell your home before buying a new one is a big decision and depends on several factors. Buying first and then selling is probably best if it’s a seller’s market. It also may be a good idea if there’s a house you can’t pass up on buying.
One of the tricky things about buying a home before you sell is that you need to qualify for two mortgages at once. But selling before buying means you may need to move twice. A lender and informed Realtor can help determine which option makes the most sense for you.
The Type of Market
If your current home is in a seller’s market, you may want to buy the new home first, then sell your existing home. A seller’s market is when home inventory is low, so there’s more competition among homebuyers.
Homes generally sell within days of hitting the market when inventory is reduced because there are so many buyers, so there’s less risk involved with buying first and selling second.
If the home you’re buying is also in a seller’s market, keep in mind that few sellers will accept a contingent offer. For example, you might want to make your new home purchase with a condition of your current home selling. However, there’s often no reason for a home seller to accept that offer if they have other buyers waiting in the wings. The best route is not to put in that contingency.
The Home You’re Buying
Sometimes, a home will come on the market at a price that’s just too good to pass up, that moment when you’ve finally found “the one.”
Perhaps the sellers are motivated due to a variety of possible reasons. Urgent need for relocation, marital separations, financial suffering, etc. In any event, they’re extremely motivated to sell.
It makes sense to buy before you sell in this case because the money you’ll save walking into the deal is worth making double payments until your home sells.
Or the home might be the only one you’ve seen that’s the right size, and in the school district you want to move to, in this case, it might be worth carrying two mortgage payments (if you have to) to get into the right home.
You Don’t Want to Move Twice
Imagine this scenario: You close on the sale of your home on May 15, and then you start looking for a new property. You find it, and your closing date to purchase that property is August 15.
You are now faced with renting for a couple of months or possibly moving in with friends or relatives. Either way, you’ll move once to your temporary quarters and again into your new home. You’ll have to pay movers twice, and you’ll probably have to pay for storage in the interim.
All this might not work out to a great deal of money spent, but you probably have better uses for that cash. And you might be tempted to settle for a somewhat less-than-perfect new home just to put the transition behind you and spend fewer weeks in your in-laws’ guest room
The Bottom Line
Buying your new home as you’re selling your old one has advantages. For example, you only have to move once. While it sounds ideal, not everyone will qualify or have the funds to pay two mortgages if your old home doesn’t sell.
Let’s connect to explore what options are available to you!