Buying and selling a home at the same time can be tricky and complicated. Usually, one home will sell before another, and figuring out which transaction should happen first can save you time, money, and stress in the future.
To get a better idea whether you should sell or buy first, use these expert tips. They can help you dial into the market and your circumstances so you can make the right decisions and time everything just right.
1. Assess the local real estate market.
Is it a buyers’ or sellers’ market? One way to determine this is by looking at how many homes are for sale locally. If the local inventory is low, it’s likely a sellers’ market. If it’s high, you’re more likely in a buyers’ market.
Keep in mind local real estate markets fluctuate throughout the year, and during the spring and summer, inventories tend to increase. That means, in general, spring and summer are usually buyers’ markets whereas fall and winter tend to be sellers’ markets.
If you are in a:
- Buyers’ market: You may have an easier time finding a new home before selling your old one. In this case, you could benefit from an extended closing and/or including a sale contingency in any offers you make.
- Sellers’ market: You’re probably going to have an easier time selling your home before buying a new one. In this case, you may want to request a rent-back agreement and/or a settlement contingency as conditions for the sale of your home.
2. Know the details of your financial situation.
When you’re buying and selling a home at the same time, you clearly have money tied up in the old home, and you will need cash for the down payment on a new one. Plus, you’ll have to take on another mortgage. Some of the specific things you’ll need to understand about your financial situation is whether:
- Your credit score will prevent or allow you to carry two mortgages.
- You can afford to pay two mortgages.
- You need the equity from your current home in order to buy the new home.
3. Understand the risks of buying before selling.
If you buy before you sell, paying two mortgages is just one concern. Other possible downsides to this option can be that you may:
- Not be able to make as big of a down payment or as high of an offer because your cash is still tied up in the old home
- Not qualify for a new mortgage because you’re already carrying a mortgage
- Feel pressure to sell and end up accepting a lower offer or cutting the asking price of your current home
4. Consider the risks of selling before buying.
Selling before buying can present its own downsides, like you will have to:
- Find a temporary place to call home
- Move twice, which can be stressful, costly, and exhausting
- Be willing to withdraw your investment from the real estate market until you’re able to find a new home to buy
5. Work with an experienced Realtor®.
A Realtor® can guide you at every phase of the process, helping you with negotiations, paperwork, and closing.
If you choose to work with the Realtors® at New Home Gurus, you’ll get experienced help and half of the commission from the purchase of your new home. We work closely with home buyers, providing them with support, guidance, and advice to help them get their dream home.
Home buyers who work with us can expect to get back, on average, anywhere from $4,500 to $12,000 after closing.
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