Should You Buy or Sell Your House First?

You are ready to sell your home. And you are ready to buy a new home. But now you have to make a big decision: Do you find your new dream home first or focus on selling the current home instead? As an experienced REALTOR®, I am often asked by clients, “What should I do first, buy a home or sell the old one?”


The answer varies depending on your priorities. Most of the time, the decision whether to buy or sell first depends on three factors: 

  1. your fears

  2. your finances, and

  3. the market

If it will stress you out worrying that you won't be able to find a new home soon enough when selling your current house, specially in a buyer's market, then buying a new home first is the path for you. However, if your finances will not allow for the luxury of temporarily owning multiple homes, you can opt to sell your house first.


Whether you decide to buy a new home first or sell your current one instead prior to purchasing, each side of the coin has its own advantages and disadvantages. Knowing them will help you to identify the risks and prepare contingencies to minimize these risks.


Pros and Cons of Buying First


These are some of the advantages to buying your home first:

  • In a buyer's market, you can purchase you new home at possibly its lowest cost; at the same time, if you're able to pay for two mortgages, you are not pressured to grab the first offer that comes along when you sell your current home.

  • You can remodel your new home before moving in. You can better plan for the interior design of your new home because you are not rushed into merely making it livable just so you can move in the soonest possible time.

  • You don’t have to worry about moving twice. You don’t have to spend time looking for a temporary place, packing everything up, unpacking temporarily and then going through the whole process of packing, moving and unpacking again when you finally get settled into your new home.

On the other hand, buying a new home first also has its fair share of disadvantages:

  • You might have to pay for two mortgages for an indefinite period of time. In this case, your finances are the most crucial of the three factors especially if you are raising a family or have other financial obligations.

  • In a buyer's market, while you are able to find a new home easily, selling your old home might be difficult and could take longer than you initially expected.

  • You might end up overspending for your new home because you do not have an actual figure of how much your current home will actually sell. If you happen to sell it for less than you expected,  you might be faced with a possible financial crisis.

Pros and Cons of Selling First


Some of the benefits to selling your current home first are listed below:


  • You don’t have to worry about having to pay for multiple mortgages. There is a much lighter financial burden for you to shoulder if you sell your house first. There is no risk of being buried in debt and not being able to meet your financial obligations.

  • Selling first will allow you to easily budget for a new home. Once your Agreement of Purchase and Sale is firm, you should have a pretty good idea on how much you can afford to spend on your new home. You will not have the fear about how to finance your new home

  • In a buyer’s market, selling first gives you more room to negotiate. If your finances are tight, deciding to sell your home first can help you ease the pressure of having to accept the first offer that comes along because you are not faced with the problem of having to pay for multiple mortgages, unlike the case when you decide to buy first.

  • You might be able to sell your home for a higher price if you sell first, especially in a seller’s market. Since you are not pressured by having to sell your home in the soonest possible time, you open yourself up to better opportunities.

  • You have the option of being able to test the waters, living in your new community by renting out a temporary home, without going in too deep. If later on you realize that the neighborhood not does not match your expectations, you can simply pack up and leave.

However, selling your home first also has some disadvantages:


  • You might have to find a temporary place to stay if you were able to sell your new home but are not able to find a new one soon enough. This might be the case in a seller’s market when it is easy to sell a home but difficult or quite pricey to buy one.

  • You might lose an opportunity to get your new home at the most optimal price because you have to wait until your house is sold. This is often the case in a buyer’s market when your dream home might be up for sale at a dream price but you have to forego the opportunity because you haven’t sold your current house yet.

  • You will have limited time to plan the interior design of your new home, if the one you bought isn’t up to your standards. You might be forced to rent out longer than you expected as you improve the interior design your new home. Either that or you might have to accept the condition of your new home as it is, just so you can move in the soonest possible time.

A REALTOR® Can Help You Decide Whether To Buy or Sell First

An experienced REALTOR® can help you identify the current market, clarify the risks and provide options on how to minimize such risks based on your situation. 


He can also help you assess if your current financial situation in the event you end up with two properties and two mortgages in case you opt to buy first. Furthermore, if you are looking to buy within the same market you are selling, your REALTOR® can give a realistic estimate of the current value of your existing home so that you can buy a new home without overshooting your budget.


In the case when you decide to sell your present home first instead, having an experienced REALTOR® will greatly increase the chances that you will be able to sell your home at a fair and competitive selling price and in a much shorter time frame. He will be able to market your home to a much larger pool of potential buyers than if you’re doing it on your own.


Also, since a REALTOR® is experienced in negotiating home sales, he can help you get more money for your home than if you sold it on your own. He will be able to help you handle the problems which usually occur when buying or selling your home, and may very likely help you avoid them in the first place. Finally, an experienced REALTOR® can help you with all the necessary paperwork involved in either buying or selling your home so you can focus on getting settled in your dream home.


 

In case you cannot view this video here, please click the link below to view Should You Buy or Sell Your House First? on my YouTube channel: https://www.youtube.com/watch?v=B0HD8wlAdSI&feature=youtu.be