Buy or Sell First?
For homeowners aiming to sell their home and buy another, it’s the classic real estate question - buy or sell first?
If you sell first, you may find yourself under a tight deadline to find another house, or be forced in temporary quarters. If you buy first, you may be saddled with two mortgage payments for at least a couple months.
You may need the money from the sale of your original home in order to pre-qualify for a loan for your new home. You may be facing a job relocation and need to sell quickly. There are many variables involved; there is no universal correct answer. It basically comes down to your specific circumstances.
However, there is generally less pressure when you sell first. “It’s whether you want the risk of owning two houses, or possibly none at all.” If you have the money to make two mortgage payments, the pressure is off. But if you need to sell your house in order to qualify for a loan, then you have no choice but to sell first.
“You can write contingent contracts, but if you really want the home, you’ll pay a premium if the seller will even entertain a contingent offer. If you go ahead with a contingent offer, then you may end up settling for less for the house you’re selling in an effort to get it sold quickly.
Even in good real estate markets, sales frequently drag on much longer than you expect. Selling in a weak market usually compounds the problem. Homeowners tend to overestimate their house’s resale value and underestimate the length of the selling process.
Selling first eliminates financial risk - no double mortgages and double payments for property taxes and insurance payments. And no worrying about how you’ll come up with a down payment.
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