Which Comes First: Selling Your Home or Buying a New One?
Your finances, the length of time it will take you to move, and the housing market conditions of both your current and future homes should all factor into your decision regarding whether you should buy or sell your house first. In most cases, it is advantageous for homeowners to sell their homes first in markets where buyers dominate, while it is advantageous for homeowners to buy their homes first in markets where sellers dominate.
It is possible to buy and sell at the same time; however, the likelihood of both the purchase and the sale falling into place perfectly at the same time is low; therefore, adaptability and patience are required.
A closer look at the advantages and disadvantages of each choice is provided below:
Why would you want to sell your house first?
The majority of people will find that selling their current home before purchasing a new one is the most practical solution; however, doing so is not always the most convenient option. If you need access to the equity in your current home in order to purchase your new home, selling your current home first can be beneficial. However, you will most likely need to find temporary housing if you sell your home before purchasing a new one.
When it comes to the real estate market, it makes the most sense for people who are selling in a buyers market to sell their current home before purchasing a new one. If you are in this situation, you are aware that it may take your current home longer to sell, and you most likely do not want to or cannot afford to make payments on two homes while you wait for the first one to sell.
1. Don’t sell your house in a hurry.
When you sell first, you get the luxury of taking your time. You are free to wait until you receive an offer that satisfies your needs without feeling the burden of the knowledge that you have already purchased (or are in the process of purchasing) a new home.
2. Present a more compelling offer to buy.
If you are buying a home during a time when sellers have the upper hand in the market, making your offer contingent on the sale of your current residence may make it less desirable or competitive.
3. Be aware of your profit from sales
You will have the actual cash from the sale of your present property, which you may then apply to the purchase of your future home if you sell it first. Because sellers frequently make concessions, it is difficult to accurately anticipate your revenues prior to the closing. When you are aware of your profit, you will be able to modify your affordability and shop in a manner that is consistent with your budget.
4. Make a single payment on your mortgage.
The mortgage on two homes can put a strain on a person’s financial situation. Having an existing mortgage can, at the very least, make it more difficult to qualify for a new mortgage because your monthly payment is taken into consideration when determining your debt-to-income ratio.
5. Stage your own house or apartment.
It is likely that you won’t need to hire a full-service stager to get your home ready for listing if you already have your belongings in place (or if you have pared down your belongings). To put your house in its best possible light, you will, of course, need to clean it up and get rid of the clutter first.
Why not focus on sales first?
Even though purchasing a new house comes first in the typical selling process, selling your current residence first can come with a few disadvantages. It can be stressful to continue living in your home while it is on the market and being shown. Additionally, it is highly unlikely that you will be able to purchase and close on your next home within the 45-day closing window of your current home, which can present additional logistical challenges.
Purchase of a house in a hurry.
You may have feelings of pressure to make your next home purchase, regardless of whether you plan to buy before your home closes or while you are staying in gap housing.
Price of short-term housing options
Staying with relatives or friends allows you to avoid the expense of paying for temporary lodging, which can be rather high.
The difficulty of relocating twice
It’s possible that having to move twice is the most inconvenient aspect of selling a house initially. It will cost more than if you were to move everything in one go, and if your temporary accommodation can’t accommodate all of your items, you may have to store some of your things elsewhere.
Advice to help you sell your property first Request a lease-back: You have the option of requesting that the purchasers lease the property back to you for a period of time as part of the closing process. This will amount to renting your previous home back from the person who purchased it. You won’t have to move twice or shell out money for temporary lodging if they give their approval to the plan.
Why would you want to buy a house before selling it?
If you have the financial stability to own two properties at the same time, buying first is a practical alternative that will prevent you from having to relocate more than once. However, the burden on your finances may force you to speed through the sale of your property, which may result in you making more concessions than you otherwise would have.
When it comes to the real estate market, it makes perfect sense to purchase a second house before selling your first one if you are currently in a sellers market. Because of this circumstance, residences have a higher propensity to sell more rapidly, which implies that you won’t have to bear two payments for an extended amount of time.
1. Buying a home in a hurry should be avoided.
Since you have not yet placed an ad in the classifieds advertising your home for sale, you have the luxury of taking your time to choose the ideal residence. If you are selling in a real estate market that is heavily influenced by the seasons, this can be an exceptionally effective strategy for you. You won’t be required to spend a significant portion of time in temporary housing even if it takes a long time for you to find a home that meets your needs and preferences.
2. Protect the house that you adore.
It’s possible that you’ve already found a property that you just adore if you’ve been looking at listings on Zillow or Trulia for some time or if an agent has been bringing you listings. If you put off selling your current home until later, you run the chance of missing out on the house of your dreams.
3. Maintain command of your shifting timeframe.
If you give yourself enough time to organize, pack, and relocate, you can avoid the stress of having to perfectly coordinate a buy and sell. Instead, you can use that time to relieve stress.
4. You should only move once.
You can skip the step of relocating into temporary housing and then again into your new home by moving immediately into your new space and then putting your home for sale once you have fully transitioned into your new space. This will allow you to go through the process more quickly.
5. Don’t bother with annoying marketing strategies.
You don’t have to struggle to get your house ready for showings while you’re still living there; you can move out first, and then have a professional staging business come in and do the decorating and staging for you. You’ll also be able to avoid the trouble of having to rush out of the house each time someone requests a tour of it, which will be a significant benefit.
Why not make the purchase first?
Even if you have the financial means to do so, not everyone is in a position to buy a new home without first selling the one they already own. After all, nobody wants to keep paying the bills for two residences for any longer than it is absolutely necessary to do so. You may not be able to sell your property for several months, depending on how the market is performing.
A hurried selling of the house
When you are already responsible for two mortgage payments each month, you may experience a heightened feeling of urgency about the sale of your first house.
The burden on their finances caused by having two mortgages
Owning two homes at the same time is a financial decision that does not make sense for many people. You might need ready cash for your down payment or to cover out-of-pocket charges like moving and staging. If this is the case, you should have some cash on hand. In addition, in order to qualify for your new mortgage, you will need to maintain a debt-to-income ratio that is manageable.
Buying advice to start with
• Fill out an application for a HELOC or a bridge loan: If you want to buy a home before selling one, but you need to maximize your cash flow, you can consider getting a short-term bridge loan or a home equity line of credit (HELOC) to pay for your new down payment.
• Give some thought to rent out your property: If you find yourself in a financial bind, you always have the option to rent out your property while you wait for market circumstances to improve.
