Buying a new home is exciting. But sometimes, you have to make some tough calls during the process.
One such question is whether you should sell your current home or buy the new one first?
Let’s try to figure it out by first going through the factors that affect this decision.
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Things To Consider
There are a few things to consider when making this decision.
1. Finances
The number one thing that could affect this decision is money.
If you have the financial means to buy your new home before selling your current one, you may want to do that. Alternatively, if you lack sufficient funds to secure a deal, you might be forced to sell first.
2. Timeline
Your timeline is another factor to consider. If you need to move quickly, selling your current house first may not be feasible because of the time constraint.
This is because it can take time to sell a home, especially in a buyer’s market. So, you would naturally be inclined to buy first and then worry about selling your current home later.
3. Market Condition
If the time and money factors don’t affect you, the current state of the housing market will play a crucial role in your decision. So, it’s important to learn the difference between a buyer’s and seller’s market. Both market conditions can have a significant impact on your decision.
With all the driving factors known, let’s picture the two scenarios and look at the pros and cons of each.
Selling Your House First
Pros
1. No Rush To Buy!
When you have decided to sell first, you don’t need to worry about the timeline as you would if you were buying first. This gives you the leeway to find the right buyer willing to pay the right price for your home.
2. Making A Better Purchase Decision
Selling first gives you an advantage of making a strong purchase. With the funds in hand from selling your old home, you can put down a larger down payment on your new home.
3. Easy Maths
When you sell first, the maths is pretty simple.
You know exactly how much money you have from selling your old home and how much you can spare for a new home or any other expenses.
Also, it makes it easy to calculate if you are making a profit or loss on the overall trade (selling and buying). Although it’s not essentially a business deal, one feels better if the difference between selling and buying is positive.
4. No Financial Strain
One of the biggest disadvantages of buying a new home before selling your old one is that you may have to pay two mortgages now. This can strain your finances, especially if your old home takes longer to sell than you expected.
So, when you sell first, you don’t have to worry about this.
5. Stage Your Own Home
When you sell first, you have the advantage of being able to stage your own home instead of hiring somebody to do it.
Cons
1. Rushed Purchase
Selling your house first may force you to rush your next purchase. This could affect your purchase decision, and you might not be able to assess the market better than you would do if you don’t sell first.
2. Managing Temporary Housing
Another disadvantage of selling your home first is that you might need to find temporary housing. This could mean renting a place to live or moving in with family or friends.
Also, this would mean you must move all your belongings twice. This can be a hassle, especially if you have a family. Plus, it will be costly to pay for two moves.
Selling Your House Later (Or Buying A House First)
Pros
1. No Rush To Sell
When you buy first and sell later, you have time to exercise due diligence and analyse a property before buying it.
2. No Need For Temporary Housing
When you buy first, you don’t have to worry about finding temporary housing or rushing your move out of the first house. It also means that you don’t have to pay for two moves.
So, it saves you money and also helps you stay at peace.
Cons
1. Two Mortgages
Selling your house later means you have to take care of two houses together. This means paying a mortgage for both of them.
Also, if the first one takes longer to sell, you have to pay for utilities and maintenance. This might force you to sell your home faster and you might not be able to get the best price for it.
Tips For Both Scenarios
If you want to sell first, you can try making a lease-back agreement with your buyer to spend a few weeks or months in your house. But, make sure you learn the mistakes to avoid when selling your house.
Or, you can try taking a bridge loan if you don’t want to sell first and want suitable purchasing power. You can read more here.
But, whatever you decide, be sure to consult with a real estate professional to get their advice on the best course of action for your specific situation.
