Which Comes First: Selling Your Home or Buying a New One?

Deciding whether you should buy or sell your house first should be based on your finances, moving timeline and the market conditions of your current and future homes. Generally, selling first benefits sellers of homes in buyers markets and buying first benefits sellers of homes in sellers markets.

Buying and selling at the same time is possible, but the odds of both the purchase and the sale lining up perfectly are slim, so flexibility and patience are required.

Here is a deeper dive into the pros and cons of each option:

Why sell your house first?

Selling your house before buying a new one is the more practical solution for most people, but it’s not always the most convenient. Selling first is beneficial if you need to access your current home equity to buy your new home. However, selling first often requires temporary housing while buying your new house.

From a real estate market standpoint, selling before buying makes the most sense for people who are selling in a buyers market. In this situation, you know the your current home may take longer to sell, and you probably don’t want to or can’t afford to pay for two homes for an extended period of time.

1. Avoid a rushed home sale

Selling first gives you the luxury of time. You can wait until you get an offer you’re satisfied with, without the pressure of knowing you already bought (or are in the process of buying) a new house.

2. Make a stronger purchase offer

If you’re buying in a sellers market, making an offer contingent upon your own house selling might make your offer less desirable or competitive.

3. Know your sale profit

By selling your current home before you buy, you have the actual cash from your sale to apply to your next purchase. It’s difficult to estimate your earnings before closing because sellers often make concessions. When you know your profit, you can adjust your affordability and shop within budget.

4. Pay only one mortgage

Paying the mortgage on two homes can cause financial strain. At the very least, having an existing mortgage can make it hard to qualify for your new mortgage, as your monthly payment factors into your debt-to-income ratio.

5. Stage your own home

With your belongings (or pared-down belongings) in place, you probably won’t need to hire a full-service stager to get your home ready for listing. Of course, you’ll still need to tidy up and declutter to showcase your home in its best light.

Why not sell first?

Although selling your current home before buying the next one is the more common selling sequence, there are some drawbacks. Living in your home while listing and showing can be overwhelming. And it’s unlikely that you’ll be able to buy and close on your next home during the 45-day closing window of your current home, which can present additional logistical challenges.

Rushed home purchase

Whether you plan to buy before your home closes or during your stay in gap housing, you can feel pressured to make your next home purchase.

Cost of temporary housing

Temporary housing can be expensive, but you can avoid it if you stay with family or friends.

Burden of moving twice

Having to move twice is perhaps the biggest inconvenience of selling first. It will cost more than doing a single move, and you might have to put some of your belongings in storage if your temporary housing can’t hold all your stuff.

Tips to sell first

  • Request a lease-back: As part of closing, you can request the buyers lease the property back to you for a few months, essentially renting your old home back from the new owner. If they agree, it prevents you from having to move twice and pay for temporary housing.
  • Sell through Zillow Offers: Selling to Zillow gives you more control over your timeline. If your home is eligible, we’ll evaluate your home’s condition in-person and give you a cash offer. Apply for an offer from Zillow while you make a contingent offer on your dream home. Then, pick a closing date that aligns with your purchase to avoid gap housing expenses. Or check your eligibility for Zillow 360, which can save you thousands and simplify your buying, selling and financing experience.

Why buy a house before selling?

If you have the financial security to own two homes at once, then buying first is a convenient option that avoids multiple moves. However, the financial strain can cause you to rush through your home sale, possibly making more concessions than you would otherwise.

From a real estate market standpoint, buying a second home before selling makes sense if you’re in a sellers market. In this situation, homes tend to sell more quickly, which means you won’t be carrying two mortgages for an extended period of time.

1. Avoid a rushed home purchase

Because you haven’t listed your home on the market yet, you can take your time searching for the right property. This can be especially helpful if you’re selling in a highly seasonal real estate market. If it takes a long time to find a home you like, you won’t have to spend an extended period of time in temporary housing.

2. Secure the home you love

If you’ve been browsing Zillow or Trulia for a while, or you already have an agent sending you listings, it’s possible you’ve already found a home you love. If you wait to sell your current home first, you may risk losing your dream home.

3. Control your moving timeline

You can avoid the stress of trying to perfectly align a purchase and sale and instead give yourself enough time to organize, pack and move.

4. Only relocate once

Rather than moving into temporary housing and then again into your new home, you can fast-track that experience by moving directly into your new space and listing your home once you’re fully transitioned.

5. Skip inconvenient selling tactics

Instead of trying to keep your home showing-ready while still living in it, you can move out first, then bring in a professional staging company to stage and decorate. You’ll also be able to avoid the hassle of having to leave the house in a hurry every time someone wants a tour.

Why not buy first?

Buying a house without selling yours first isn’t for everyone, even if you can afford it. After all, nobody wants to foot the bill for two homes any longer than necessary. Depending on market conditions, it could take months before you’re able to sell.

Rushed home sale

When you’re making two mortgage payments each month, you might feel a sense of urgency to get your first home sold.

Financial strain of two mortgages

For many people, it doesn’t make financial sense to own two homes at once. You may need cash available for your down payment or to cover out-of-pocket expenses like moving and staging. And you’ll need a strong debt-to-income ratio to qualify for your new mortgage.

Tips to buy first

  • Apply for a bridge loan or HELOC: If you’re interested in buying before selling but need to maximize cash flow, you could take out a temporary bridge loan or HELOC to pay for your new down payment.
  • Sell through Zillow Offers: Rather than waiting around for a traditional offer, you can sell directly to Zillow for cash. Simply tell us a little about your home, and if it qualifies, allow our estimator to analyze your home’s condition. Afterward, we’ll provide a market value offer and you can close in as few as seven days. With Zillow Offers, you entirely avoid listing and marketing your home for sale.
  • Consider leasing your home: If money gets tight, you can always rent your home and wait for market conditions to improve.

See original article published on Zillow here.