Should I Buy or Sell First?

Moving to another home may make you feel like you’re putting together a jigsaw puzzle, struggling to make all the pieces fit. If you sell first, you may find yourself under a tight deadline to find another house, or be forced into temporary quarters. If you buy first, you may have two mortgage payments for a few months...and you may need the money from the sale of your current home to qualify for a loan for your new home.

There are many variables involved, and there is no universally correct answer. It comes down to your unique situation. One school of thought is that there is generally less pressure and stress when you sell first, and you can even make the sale of your current home contingent on you finding a new home if that is a concern for you...but if you think it will be difficult to find what you are looking for in your next home and you will only sell if you find it, it may make sense to buy first if you qualify.

You can write an offer to purchase your new home contingent upon the sale of your current home...but you’re more likely to pay premium price, if the seller will even entertain a contingent offer...and you risk losing the home if they get another offer before you sell your current home.

Here are some steps to help you get started.

Gather information

Start by getting an analysis of your current home to get an idea of what it might sell for in today’s market. This is also the time to check out what homes are available for you to buy to see if you can move comfortably. Check with your lender to see what you qualify to buy, with and without selling your current home...it’s good to know your options. You may be surprised what you qualify for with the many financing options available and the equity in your current home.

Most homeowners move up about 50% in value

When people move up to another home, most buy about 50% more than the value of their current home. For example, that means if your current home’s value is about $225,000, you might move up to a home with a value in the range of $300,000-$350,000.

Apply for a home equity line of credit

If you are thinking about using the equity in your current home to get the cash to close on your new home before you close on your current home, you might consider a home equity line of credit. Typically this is the cheapest and easiest way to bridge the financing between the mortgages of your current home and your new one. You should have this credit line in place before listing your current home for sale.

Get your home ready to sell

Whether you buy or sell first, it’s time to get your current home ready to sell. To get top dollar, it should be neat, clean and in good repair. You might be able to use your home equity line to make needed improvements if cash is short. If you are considering making a purchase contingent on the sale of your current home, your home must be ready to list immediately if it isn’t already on the market at the time you make a contingent offer.

Arrange financing & shop for a new home

If you haven’t already bought a home when you put your current home up for sale, it’s time to get your financing finalized and start looking for your new home. Things may not go according to your well-made plans, so be prepared to be flexible...but don’t worry, it always seems to work out in the end.

Coordinating closings

When you move up, coordination can become complicated. There are many different people involved in both transactions, including home inspectors, appraisers, loan officers, underwriters, closers and title companies. In addition, it may be further complicated with as many as 3, 4 or more families stacked up like dominoes... each sale contingent upon the other.

The fewer people involved in coordinating your closings, the more efficient the process. It’s generally easiest when you work with the same agent to both sell your current home and buy your new one. We’ll coordinate both closings and keep you informed as we walk you through all the steps of the process.