Evaluate the pros and cons of selling your home before before buying another home. Should you sell your house before you buy a new one?
Sell before you buy:
1. It gives you more cash to put towards your next home.
Most of us can’t afford to buy another home before we sell our current one.
Not only will you be in a better negotiating position if you have cash on hand from your own current house, but you’ll also be better informed on how much cash you have to play with.
Without selling first, you might need to submit an offer that’s “conditional” upon the sale of your home — and that offer is weaker than an offer without a home sale condition. Another would come along and may present a better offer and you would loose out on your dream home.
2. It saves you from having to pay for two mortgages.
You have no idea how long your home may take to sell. In addition to the time it takes to find potential buyers, there are several reasons between the time of the offer and the time of closing that can change the course of things.
Imagine that the buyer’s home inspection shows serious issues with the property or that the appraisal didn’t reflect the value you had in mind.
If your home ends up taking too long to sell, you could pay for two mortgage payments – simultaneously.
3. Sell on your own terms.
When you sell before buying, you have more negotiating leverage as a seller. You aren’t in a hurry to sell your property quickly because you’re not feeling the stress that results from having two mortgage payments. You’ll be comfortable contemplating various offers without the pressure to accept a lower price than you anticipated.
6 reasons to buy before you sell:
1. You enjoy knowing what’s ahead of you.
If you’re the type of person who feels nervous leaping into the unknown, you may find you’re better able to let go of your current home when you know you’ve got your next place already lined up.
2. You have time to hold out for what you want.
You won’t feel rushed into settling for a home that’s less than perfect just so you have somewhere to live (or because your friends are getting sick of your crashing in their guest room).
You’ll be able to wait for your housing preference, whether it’s the perfect neighborhood, perfect layout, or the perfect price (or all three).
3. You could still bring cash to the table.
You may qualify for a bridge loan if your credit is good and you have enough equity in your current home.
These loans allow transitioning homeowners who haven’t yet sold their current home to access the money they need for a down payment on a new home.
4. You save on extra moving costs and hassle.
If you sell your home before you buy the next one, you may wind up moving twice — first to temporary housing and then to your purchased home. Conversely, if you buy first, you’ll need to move only once.
Moving twice doubles the hassle and cost, from truck rentals to movers’ fees to the stress of boxing all your belongings, unpacking some of them in your temporary residence, and then repeating the process.
If your temporary residence is small, like a hotel room or a guest room in a friend’s house, you’ll also face storage fees for all your furnishings in limbo.
Besides, moving is distracting and time consuming; the more you can minimize it, the better.
5. You have a safety net.
You can always make an offer that’s contingent on the sale of your current home.
This safety net allows you to put your next house under contract while still giving yourself extra time to find a buyer for your current home. In theory, that’s the best of both worlds.
Having said that, a home sale condition is undesirable from the seller’s point of view, which could encourage him to favor other offers. If you’re in a strong buyer’s market, a seller might be more amenable to an offer with conditions.
6. Your next home is too good to pass up.
You’ve found your perfect dream home, and the seller is really motivated.
If you love the new home to a point that you know you’ll regret letting go of this opportunity, then it could be worth taking a chance.
To sell or to buy first?
Deciding whether to sell or buy first is a personal dilemma, one that has no right or wrong answer.
Ultimately, your ideal answers will come down to your comfort zone, priorities and budget.