Selling your home before buying a new home

Quick insights

• Selling your current home first may help provide a clearer understanding of your budget for the next purchase.
• Buying a new home before selling could offer a smoother move with less disruption to your daily routine.
• Market conditions and your financial flexibility might influence which approach is more practical for your situation.

Some homeowners may face the question of whether to sell their current home before buying a new one or buy first and sell later. Each option has its own set of advantages and drawbacks. Your decision will likely depend on your finances, the housing market and how flexible your timeline is. Understanding both sides can help you plan your next move with confidence.

Can I buy a new house before I sell mine?

Yes, you can buy a new house before selling your current one. However, whether it’s the right move will depend on your finances, the housing market and how comfortable you are with risk. Some people prefer securing a new home first to avoid temporary housing, while others may choose to sell first for financial clarity.

Key points to consider:

• Timing: Selling first avoids two mortgages but requires precise timing.
• Market Conditions: In a seller’s market, selling first might have a financial benefit.
• Financial Clarity: Selling first could help set your budget for your next home.
• Temporary Housing: Be ready for the possibility of staying in short-term housing if you haven’t found a new home yet.

Strategies to make it work

• Work with an experienced real estate agent: A skilled agent can help coordinate the timing of both transactions and negotiate terms that work in your favor.
• Include a home sale contingency: When buying a new home, ask to include a contingency clause in the contract that makes the purchase dependent on selling your current home.
• Negotiate a delayed closing: Request a longer closing timeline on your new home to give you more time to sell your existing property.
• Use a rent-back agreement: After selling your current home, you can negotiate to stay in it for a short period (by renting it back from the buyer) while you finalize your new home purchase.
• Explore bridge loans: If you qualify for a bridge loan, it can help cover the down payment on your new home before your current home sells.
• Get preapproved for a second mortgage: If possible, getting preapproved for a second loan can help you shop during the process of selling your home.

Pros and cons of selling your old home before buying a new one

Selling before buying can help you stay financially grounded, but it may require some flexibility when it comes to timing your move.

Pros:

• Financial clarity: The information from your home sale can help set your budget and hone your search for a new place to live.
• More streamlined mortgage preapproval: Loan providers may find it easier to approve a new loan when the applicant doesn’t have an existing mortgage.
• Less pressure to sell fast: You can take your time finding a buyer without feeling like the sale has a deadline.

 Cons:

• Temporary housing may be needed: You might have to move into a short-term rental or stay with friends/family if there’s a gap in ownership.
• Double moves: Selling first may mean moving twice—once into temporary housing, and again into your new home.
• Limited buying flexibility: You may feel rushed to buy quickly after selling your house to avoid certain financial limitations or temporary housing.

Weighing the alternative: Buying a house before selling yours

Buying a new house first could be more convenient, especially if you find your dream home unexpectedly, but it may come with some financial risks.

Pros:

• No pressure to rush your purchase: You can take your time finding the right home.
• Smooth transition: You can move directly from your old home to the new one without temporary housing.
• More control over timing: You may not have to align closings as closely.

Cons:

• Two mortgages at once: You may have to pay for both homes temporarily, which could put a strain on your finances.
• Harder mortgage approval: Qualifying for a new loan while still carrying your old one can be tricky.
• Market risk: If your current home doesn’t sell quickly, you may face added stress or need to reduce the price.

Tips for selling your house before buying another

Selling your house before buying another could be a smart financial move, especially if you plan ahead and stay flexible.

• Temporary Housing: Plan in advance for where you’ll stay between selling and buying.
• Coordinate Closings: Work with your real estate agent to align your sale and purchase dates as closely as possible.
• Contingency Clause: Consider adding a home sale contingency to your purchase contract—this can give you time to sell your current home before finalizing the purchase of your next one.

In summary

Whether you sell or buy first, your financial situation, market conditions and personal comfort with risk are important. Selling first could offer financial clarity but pose some logistical challenges. Weigh the pros and cons, work with a real estate agent and plan ahead to choose the path that’s right for you.