Should I Sell or Buy First?

Contact Steve – Golden Realty Group  321-243-4892

People's First Financial Services  321-242-8240, Melbourne, FL

Homeowners often struggle with the dilemma of whether to buy another house before selling their current one, or to sell before purchasing their next home.  It’s not an easy decision. There are a number of factors to consider before deciding which is best for you. There is no definite answer because personal circumstances can weigh heavily on the homeowner’s decision.  Most people try to buy and sell simultaneously, which is the best way to go for many people - if the market cooperates. If it does not, then both approaches have their advantages and disadvantages, therefore homeowners should carefully evaluate their situation before making a decision. 

Selling First:

When you sell first you relieve the stress and financial burden of making a double mortgage payment.  You also know your price range when looking to buy based on your net gain from the sale of your home.  This allows you the opportunity to explore various housing options that are available.  In a market where there is a surplus of homes and a scarcity of buyers, many people prefer to sell first.  If you’re planning to sell and buy at the same time, aim for a closing date for the sale of the current home after the closing date for the new home.  That way you can stay in your old home until you are able to move.  If your new home is not ready in time, you may ask the buyer’s for a short-term lease back after closing.  On the downside of selling first, your new desired home may not be available causing you to resort to costly and inconvenient living arrangements and a double move.

Buying First:

Buying first lets you know where you are going to live and when you can move.  Families with children that prefer a particular school district tend to buy first in order to start the school year in the new district.  But, can you carry both properties? If you buy a new home before your old one is sold you'll be faced with carrying two mortgage payments for an undetermined period of time. Can you handle this financially? Will you be able to fund the down payment on your new home without the sale proceeds from the old one?

Bridge Loan: If your income is sufficient to carry the payments, a bridge loan may help you get through this period. Those who don’t have the cash but prefer to buy first often use their home equity as a “bridge” loan to supply the down payment for their next purchase.  In this case, the downside of buying first is the risk of making two mortgage payments due to not selling right away, or having to compromise on your asking price in order to sell it quickly. 

Rent: Are you willing to rent or live with relatives?  If you accept an offer for your home before you've bought a new one you may have to move into a short-term rental until you find something to purchase, or move in with a relative. Are you prepared to move twice, with all the hassle?

Contingent Contracts: The ideal situation is to make the first contract contingent upon the other. For example, you agree to purchase a home but not to close until you've sold yours. Unfortunately, few sellers will agree to this kind of condition (and few buyers will agree to wait until you find a new property). You may be able to negotiate the right to stretch out the closing date by a reasonable period, however. This gives you more time to try to match up the closing dates.

Buying New Construction: Purchasing a home that is under construction (or not yet started) gives you considerable time to sell your existing property. Don't forget, however, that you are committed to close on the new house when it is completed. Make sure you are able to do so even if you do not sell your present home - or if you have to slash the price to do so.

Since we are not privy to your finances it will be your decision. We will supply you with market statistics.  Statistics of listed homes that are available in the area, builder incentives on new homes, how many homes are pending sale, how many are selling and try to compare it to a similar time frame.  If sales are off that changes the whole picture.  Local housing markets and conditions can influence the decision to buy first, such as when there’s a shortage of homes for sale and a high demand from buyers, or when home prices are rising in market value.  It is difficult to predict what the market will be from one week to the next.