Buy or Sell First?
For homeowners aiming to sell their home and buy another, it is the classic real estate question the chicken or the egg — to buy or sell first?
If you sell first you may find yourself in a tight deadline to buy another house or be forced into temporary quarters. If you buy first you may be saddled with 2 mortgage payments for at least a couple of months. You may need the money from the sale of your home to pre-qualify for the loan for your new home. You may be facing a job reloccation and need to sell quickly.
There are many variables involved; so there is no universal correct answer. It comes down to your specific circumstances. In general there is less pressure when you sell first. It comes down to risk. It’s whether you want the risk of owning 2 houses, or possibly none at all.
No doubt the stress level is less when you sell first. You have time to get the pre-approval on your new loan and consider all of the housing options in your price range.
Here is what I suggest: when your selling house is in contract pick the best 3 homes of those you’ve viewed and prepare to make an offer on the one that best meets your needs. The absolute worst thing that can happen is that the right home isn’t available. You end up in a rental with the cash in your pocket and pre-approved financing on the balance you need. And, you look like a cash buyer on the home you finally decide on.
Even in good real estate markets, frequently sales drag on much longer than you’d expect. Selling in a weak market usually compounds the problem. Homeowners tend to overestimate their houses’ resale value and under estimate the length of the selling process– a fiscally deadly one-two punch. .