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Are you thinking about selling your home but still debating whether to sell your current house before buying or buy first and then sell? While there are pros and cons to both approaches, the answer may depend on your unique circumstances. Here are some things to consider before making a decision.
Selling First Pros
- You’ll know exactly how much money you have to work with when you start shopping for a new home. This can help you stay within your budget and avoid getting in your head financially.
- You will be in a better-negotiating position when making an offer on a new home since you don’t need to worry about selling your current one.
- Since you won’t have the added stress of trying to coordinate the sale and purchase of two homes, selling first may be less emotionally and mentally taxing overall.
Selling First Cons
- You may end up having to move twice if you can’t find a buyer for your current home right away or if there’s a delay in the closing. This could mean living out of boxes for several weeks or even months.
- If the real estate market is slow, it could take longer to sell your home which would eat into any profits you make and could also delay your move-in date for the new house.
- You may have to rent temporarily if you can’t find somewhere else to live in between selling and buying which could add additional costs to your budget.
Looking to Sell? Start Here
How to prepare for selling first before buying:
Figure out your living conditions:it's important to think about your living situation during the selling first and buying later process. Are you comfortable with the idea of moving in with family or friends while you search for your new home? Alternatively, would you prefer to rent a temporary apartment? Ask yourself these questions and make sure you have a plan in place so that the selling process is as smooth as possible.
Set realistic expectations:
This part is very important since your future planning may change based on this information. You should set expectations with your realtor on:
- Listing stats,
- number of showings,
- average days on the market for the neighborhood, and
- what to do if the property doesn't sell (price adjustments, etc.)
By following these steps, you'll ensure that both you and your realtor are on the same page and working towards the same goals. An effective real estate agent will be able to provide you with the information and support you need to sell your home quickly and for the best possible price.
Speaking to a mortgage advisor:
Before you start shopping for a new home, it's important to get your finances in order. One of the first things you should do is speak to a mortgage advisor. They will be able to give you an idea of how much you can afford to spend on a new home.
This will help you to narrow down your search and avoid properties that are out of your price range. Once you've got an idea of what you can afford, you can start looking for your dream home.
Knowing what you’re looking for in a new house:
After getting your finances in order, make a list of must-haves and nice-to-haves. This will help you narrow down your search and speed up the buying process.
Once you find the perfect home, you’ll need to be prepared to make an offer quickly.
Consider a lease-back from the buyer:
In some cases, the buyer may be willing to lease the property back to you for a period of time. This can give you some extra breathing room while you prepare to buy your next home.
Buying a New One Before Selling your current Home
On the surface, it seems like buying first would be the way to go – you don't have to worry about finding a new place to live, and you get to start enjoying your new home right away. However, there are also some risks associated with this strategy. Here's a look at the pros and cons of buying first and selling later.
Buying First Pros
- You can start searching for your dream home without the pressure of having to sell your current one first.
- It gives you more time to find the right buyer for your home.
- It gives you the opportunity to stay in your current home until you find the perfect replacement.
Buying First Cons
- It can be more difficult to qualify for two mortgages at once which might limit your buying power or require a larger down payment than you had initially planned.
- Carrying two mortgages at once could strain your finances and put you at risk of defaulting on one or both loans if something unexpected comes up like job loss or medical bills.
- You may end up stuck with two houses if your current one doesn’t sell as quickly as expected which could mean making two mortgage payments every month until it does finally sell.
Ready To Buy? Start Here
How to prepare for buying first and then selling
So, you're finally ready to take the plunge and buy your first home. However, before you start attending open houses and scheduling tours, there are a few things you need to keep in mind.
Carrying two mortgages:
First and foremost, if you're buying a home before selling your current one, you'll need to factor in the cost of carrying two mortgages. Rent out: one way to offset this cost is to rent out your old house. This can help cover your mortgage payments until your new home is sold.
Conditional Offer:
Alternatively, you can try to negotiate a contingency clause in your purchase contract. This clause stipulates that the sale is contingent on the successful sale of your current home. Of course, this isn't always possible, especially in buyers' markets where your house may sit on the market for a long time or if your home is priced higher based on the current market conditions.
Home equity loan or bridge loan:
Another option is to get a home equity loan or bridge loan to cover the cost of the down payment on your new home. Speak directly with your mortgage advisor as they will be in the best position to answer this question.
Conclusion
Get the Right Help: A real estate agent can help you navigate the market and find the right home for your needs. A mortgage broker can assist you in securing financing.
Deciding whether it’s better for you to sell first or buy first depends on many factors including timing, finances, and personal preference. Weigh the pros and cons carefully before making a decision so that you can choose what’s best for your unique situation. Whatever route you decide to take, be sure to do your homework and plan ahead to avoid any stressful surprises later on.
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