Buying a New Home While Selling Yours? Here’s How to Make It Work

The first home you buy may not be where you live forever. When it comes time to move, you are faced with the prospect of acting as both a home seller and a homebuyer. How do you juggle the financial and logistical aspects of these two different roles?

Sell First, Then Buy

You can choose to offload your old home before you head out into the market as a buyer.

Pros

With the sale of your home behind you, you know exactly how much you can budget for the purchase of your new home. Plus, you don’t have to worry about the potential burden of carrying two mortgages.

Cons

On the downside, selling your home without buying your new home can leave you in a position where you need to find a place to live. You may need to pay for storage and temporary housing, which could mean committing to an apartment or house lease for up to a year while you find your new home.

With that possibility looming, you may feel pressured to put in an offer.

Buy First, Then Sell

What could buying before selling look like?

Pros

Buying first gives you more time to search for your new home. You can even move out of your old home before listing it for sale, making showings easier.

Cons

Buying first comes with more financial considerations. You could be carrying two mortgages for an indefinite amount of time. You may need more cash on hand or financing to help you through the period between the purchase of your new home and the sale of the old.

Make a Contingent Offer

You can make an offer on a new home contingent on the sale of your old property. You can strengthen your offer by offering flexible terms and securing a solid pre-approval letter on a new mortgage loan.

Pros

Making an offer contingent on the sale of your old home limits your financial risk. You won’t be on the hook for two mortgages. It can also give you more time to close the sale on your property.

Cons

Sellers may not be all that eager to accept an offer with a contingency clause that ties the sale of their home to the closing of another deal. They may move on to other offers, particularly in a seller’s market.

Make Your Home Market-Ready First

Before you list your home or put on an offer on a new home, take the time to make your property market-ready. Clean and organize. Improve the curb appeal. You can also schedule a pre-sale home inspection to get an idea of any repairs that might make your home more attractive to buyers.

Use the Same Agent for Buying and Selling

Using the same real estate agent for buying and selling can make the process easier. You have one point of contact who will manage both transactions, potentially saving you money on commission costs.

Keep in mind that you may not have this option if you are making a long-distance move, say out of state.

Time the Closings

In the ideal scenario, you and your agent will be able to coordinate the closing dates on both houses, the old and new, for the same day or within a few days. That small window will be hectic, but you could eliminate the need to pay for other living arrangements or storage.

Consider Renting Out Your Old Home

If you are experiencing a market that favor buyers, you may find it difficult to sell your old home. Renting out that property could be a short-term, or even long-term, solution.

Risks

You will need to manage owning two properties if you decide to rent your old home. That could require paying two mortgages. Rent payments might cover your mortgage payments on your old home, but you will need to find a reliable tenant.

Renting out a home will require you to act as a landlord, or you will need to hire a property manager. In either case, you will be responsible for insurance and upkeep on the house that you rent out.

The Bottom Line

Buying and selling can be stressful, but planning ahead and working closely with your real estate agent and lender can ensure a smoother process.