Buying a Home or Selling a Home: Which Comes First?
It’s puzzling to figure out the logistics of buying and selling a home at the same time. Should you sell your home first? Or should you buy your new home first? In this post, we’ll explore a few factors to consider in this decision. Then we’ll look at the pros and cons of both options.
4 Key Factors to Consider When Deciding to Buy or Sell First
Buying a new home or selling your current home—which comes first? The answer depends on several factors.
1. The Current Real Estate Market
Is your current home in a seller’s market or a buyer’s market? A seller’s market is when there are more potential buyers than homes available to buy. It’s when the demand exceeds the supply, creating a housing shortage. A buyer’s market is when there are more homes for sale than interested buyers, creating a housing surplus.
In a seller’s market, it makes sense to buy your new home first because it’s safe to assume you won’t have any trouble selling your home.
If the home you want to buy is in a seller’s market, it’s unlikely the homeowner will accept a contingent offer. They have no reason to wait for you to sell your current home first because there are plenty of other buyers willing to buy the home immediately.
If your current home is in a buyer’s market, it’s best to sell it first because the sale might take a little longer, and you don’t want to be stuck with two mortgages indefinitely.
2. The Home You Want to Buy
If you come across a too-good-to-pass-up home for sale, it might be best to snatch it up before you sell your current home.
Sometimes a homeowner is highly motivated to sell because of life circumstances, such as a divorce or severe financial strain. If they’re selling price is the best deal you’re likely to find, the money you save on the home purchase might be enough to make double house payments worthwhile until your current home sells.
If you’ve been looking for a home with specific features in a certain location, and it seems hard to find, as soon as one becomes available that matches your criteria, it might be worth buying it before you sell your current home to ensure you don’t miss out.
If you sell your home first but can’t find the right new home before your closing date, you might have to move twice. This can be costly and it’s definitely inconvenient. You have to move out of your current home, put your belongings into storage, and find a temporary place to live. When you’re finally able to move into your new home, you have to move all over again.
4. Your Mortgage Qualifications
If you buy a new home before you sell your existing home, you have to qualify for two mortgages at once. For some people, this simply isn’t possible. Talk to a lender to find out if your income and debt-to-income ratio would qualify you for a new mortgage before you sell your current home.
Pros & Cons of Selling First
Should you sell your home before you buy a new one? Let’s look at the pros and cons of this scenario.
Pros of Selling First
When you sell your home first, you have the luxury of time, so you can wait for the right offer. If you bought a new home first, you might be tempted to accept a lower offer because you’re in a rush to sell.
After you’ve sold your home, you know exactly how much money you have to work with to buy the new home. Plus, for some people, this makes it easier to qualify for a new mortgage.
Because you have the freedom to move quickly, selling your home first puts you at an advantage over other potential buyers who can only make offers contingent on the sale of their own homes.
Cons of Selling First
The biggest disadvantage of selling first is the risk of having to move twice. If you sell your current home and don’t get a new one before your closing date, you’re forced to move into a temporary place for a while. This is a hassle and adds significant costs to your home buying process.
There’s also the risk of missing out on the best price for your new home. If housing prices are on the rise, waiting until your current home sells could mean the home you want will be unaffordable by the time you’re ready to buy.
If you’re completely focused on selling your home, you could miss out on the ideal new home. Avoid this mistake by enlisting the help of a real estate agent to keep an eye out for the home you’re looking for. If an amazing deal comes up, you don’t want to miss it.
Pros & Cons of Buying First
Should you buy a new home before you sell your current one? Let’s look at the pros and cons of this scenario.
Pros of Buying First
If you can afford to buy a new home before selling your current one, you avoid the hassle and expense of moving twice. As soon as your home sells, you can move into the new one. This is especially convenient if you want to do any renovations before moving into your new home. It’s the luxury of time.
Buying first is definitely the best option in a seller’s market or if you find your dream home at a good deal. If housing prices are rising, you want to buy as soon as possible to get the lowest price.
Cons of Buying First
The downside of buying first is the cost. If you don’t sell your home before your new home purchase closes, you’ll be paying for both houses at once. The longer it takes to sell your home, the longer you’ll be paying for two homes. Because you’re in a rush to sell, you’re more willing to accept a lower offer on your current home, which might mean financial loss.
Should you buy a home or sell your home first?
Deciding whether to buy or sell first can be tricky. A real estate agent can help you figure out which option makes the most sense for you. No matter which option you choose, work with your real estate agent to add a contingency to your contract to line up the closing dates, if possible. The real estate agents at Vickie Cooper Realty Group can help! Contact us today!