A major question many of our clients ask us is… How do you sell your home if you also need to buy? Buying or selling a home is a stressful time, no doubt. Lenders, agents, listings, showings, open houses, contracts, inspections, and more. They all add up to a heck of a lot of trouble.
If you were renting before you decided to buy your first home, you’ve only had to look at it from one perspective: the buyer’s. But maybe now you’re starting to outgrow your starter home and looking to move on to something new.
Now you aren’t just a buyer, you’re a seller too.
So you’ve got to deal with the question that so many homeowners just like you have tackled eventually: how do you sell your home if you also need to buy?
Since it’s unrealistic to expect that you’ll close on your old house and your new one at the same time, you’ve got to decide whether you’re aiming to buy first or sell. Both come with their fair share of advantages and disadvantages.
If you sell first, the primary advantage is that you know exactly how much money you’ll be working with when it comes to buying. Ideally, the deal is sealed, the check is cashed, and you’ve got the profit from the sale in your account before you start making offers on new homes.
Having all your finances squared away ahead of time is important because it means that you can hunt for homes within your budget and avoid the life changing mistake of buying a house you can’t afford. You’re also more likely to get approved for a new mortgage if your first one is already paid off.
The downside to selling first, of course, is that you’ll need to find somewhere to live while you hunt for new homes. Sometimes, you might have friends or family who can put you up. More than likely, however, you’ll need to find a short term rental arrangement. While this might throw life for a loop for a few months, selling first is usually a pretty safe financial bet.
If you buy your new house first, you’ve got the advantage of having somewhere to move into immediately. Or, if you’ve bought a fixer upper, you’ve still got your old house to live in while you get the new one up to speed.
You also don’t have to worry about putting all of your stuff in storage to sell your old house. You can move in at your own pace. So buying first can take a lot of the hustle-and-bustle stress out of the whole experience.
The main disadvantage of buying first is the financial risk. You are stuck paying two mortgages at once. This might be sustainable for a few months, but for a lot of people, the expense will snowball quickly. If you have trouble selling the old house for any reason, you could risk foreclosure.
You might be able to avoid the trouble by buying a home contingent on the sale of your first house. This basically means that you agree to close on the new house only if you are able to sell your own.
While this gives you some financial stability, it also makes you a less than ideal buyer. You might have trouble making such a deal in a hot real estate market.
If you aren’t sure whether buying or selling first is best for you, give us a call.
We can help you get a good idea of what the process looks like from start to finish and evaluate both the market you live in and the one your looking to buy in. With a clear picture of all the variables in the equation, we’ll help you better understand how to sell your home if you also need to buy.