If you own a home but intend to sell it and buy another as part of your move, you may find yourself asking, “What should I do first – buy or sell?” It’s complicated to keep everything balanced in either situation, but there are advantages both to selling first, then buying or taking the opposite approach.
To help you decide which fits your situation best, you first have to determine the state of the real estate market you are selling in. But you will also have to seriously consider your finances, your comfort level in balancing transactions, your interest in moving once or multiple times and more. Keep reading to make this balancing act work for you.
Right now, while homes are selling quickly, it’s easier to purchase your new home first, since there are fewer homes on the market for buyers to choose from, so your home should sell faster. The main drawback is the possibility of getting caught in a transition market – it doesn’t take long for a seller’s market to cross the line. We can advise you as to the local real estate market in our area. Sometimes in a seller’s market, sellers would rather sell first, move into temporary housing, then take their time purchasing their next home. The sell first, buy later choice removes one stress of the transaction before the buying phase begins. It will also allow you the luxury of time to find the right house for your needs.
By selling first, you will also know exactly how much equity you’ll have that can be invested in your new home. If finances are tight, this might be the right choice for you.
However, don’t forget to plan for the numerous expenses of moving out of your home and into a temporary home (for an undetermined amount of time), then out of that temporary home and perhaps paying for storage of excess belongings along the way. These costs can add up, so consider this scenario with finances in mind.
Trying to sell in a buyer’s market may take some time. Ideally, you’ll sell before you close/settle on the purchase of your next home. If you commit to purchasing a home without having sold first, make sure you can afford a down payment, and perhaps double payments (including mortgage, insurance, maintenance, utilities, etc.) until the first home sells. You may also consult with a mortgage pro to determine whether a bridge loan might be the answer.
To protect your interests, consider using a Home of Choice (HOC) clause in the sales contract of your current home. The HOC clause allows you to make the contract contingent on finding a home to move into – within a specified time frame – before your current home goes to closing/settlement.
Contact us to find out what the best approach is for your situation if you are considering both selling and buying in today’s market. We are always available for advice! 352-973-2366.