Should You Sell or Buy a Home First?
If you are considering upgrading to a larger home, downsizing, or moving to a different area, you will have to choose whether to sell your existing house first or to buy a new home and sell the old one afterward. Both solutions have advantages, depending on market conditions and other factors.
Selling Your Current Home First
This is often the easiest and most logical approach. Selling your home can provide the capital to buy a new one and you will not have to worry about carrying two mortgages or having the credit to do so. This means, of course, that if you cannot close on a new house quickly, you may have to temporarily rent a home and move twice in a short amount of time. Alternatively, you could work out a rent-back arrangement with the buyer or a longer closing period to allow time to find a home. If you have a limited shopping window, however, you may settle for a home that is not up to your standards or you may pay too much.
Some advantages of selling first include:
- You won’t have a need for two mortgages or a bridge loan.
- You are not pressured to sell, allowing you to wait for a better offer.
- You will have a firm idea of what you can spend on a new home after selling your old home.
If it is a buyer’s market when you decide to buy a new home, selling first will allow you wait for the right offer, without worrying about paying an extra mortgage on a house that may not sell quick enough.
Buying a New Home First
If you have the credit to do so, buying the new home first can allow you to move only once while eliminating the need for a temporary housing solution. It also allows you the freedom to jump at a great opportunity, such as a house selling below market value due circumstances like divorce or a home that is exceedingly desirable and will only be on the market for a short time. Buying first, however, will force you to carry two mortgages or to use an option like a bridge loan or a home equity line of credit to finance the new home, if your credit allows. If your old home does not sell quickly, you could be stuck with both mortgages for an extended period or be forced to rent out one of the homes.
The advantages of buying first include:
- You won’t have the need to move twice and pay rent on temporary housing.
- You can act quickly on homes that are below market value, desirable, or rare.
- You can choose a home you really want, because you are under no pressure to move quickly.
If it is a seller’s market, buying first may be a reasonable choice, because it will be easier to sell your old home quickly once you find a new one, and you may even be able to do it concurrently.
Real Estate Services in DC, MD, & VA
When you are ready to buy a home, sell a home, or both, you can count on our team at Coakley Realty for helpful advice and quality, professional real estate services. We have been helping residents of Washington, DC, Maryland, and Virginia buy and sell homes and commercial properties since 1989. We offer commercial and residential real estate, property management, appraisal services, tax appeals, and more.