Whether you are considering moving up to a larger house, downsizing, or maybe just looking for a change, the question of “Should you sell before you buy your next home?” is a widespread dilemma that homeowners face. Before we go any further, we want to clarify that there is no universal response to this question. The decision depends on various personal factors and circumstances, and thus, it is something you need to figure out on your own. So, to help you decide what the best option for you is, we’ve prepared the pros and cons of both. By the time you finish reading, you’ll hopefully reach out to get your cash offer.
Sell or buy a home first – which way to go?
Which step should you do first: should you start by selling your property to play it safe and possibly cope with moving twice? Or should you buy the property of your dreams first and run the risk of having two mortgages? Because each person is unique, no single solution is correct or incorrect.
What is best for you will be determined by various factors—for example, market statistics, your budget, your finances, and the amount of risk involved. For instance, if you are going through a significant life change such as divorce or rehab, it can be overwhelming to juggle everything. So the experts from Bright Futures Treatment Center FL advise approaching your real estate adventure slowly and with caution. You must be prepared well to avoid feeling anxious or triggered.
In the following paragraphs, we’ll discuss the benefits and drawbacks of each strategy. Think about it and ensure you’ve adequately considered all the points. You have a greater understanding of yourself than anyone else does. Therefore, whatever stands out to you the most is the path you should choose moving forward.
Selling your home first
When you have two transactions going on at once, the most straightforward strategy is to start with selling your property. It is more practical from a financial standpoint. This way, you’ll know your budget for the new home after considering the costs of any necessary repairs, home preparations, and moving expenses.
While this option doesn’t include a significant financial risk, it does involve an emotional one. You may have to relocate twice. This means that you’ll probably have to make do with a hotel or other temporary housing, which can be pretty stressful.
In these situations, finding balance can be tricky, especially if you already have too much on your plate. Imagine already struggling with keeping a career while in rehab and having to add moving and adjusting to a new environment to that equation. If you are going through a similar situation, perhaps selling your home first isn’t the best option. Or, it could be if you decide to sell your home to a cash buyer. That way, you’ll have the most flexibility as you’ll choose when you want to move out.
Pros of selling your home first
Here are the most significant benefits of selling your home before buying a new one:
- If you sell your home first, you’ll have a predetermined budget that you’ll have to stick to when the time comes to buy a new one.
- The financing is very easy! You can put a significant portion of the money from the sale toward your down payment. You can borrow the rest in the same way you did for your initial mortgage.
- You’ll be under much less pressure. You should negotiate with self-assurance to get the best possible price for the sale of your current home, and you should take your time looking for the ideal home.
Cons of selling your home first
Selling your home first comes with some drawbacks, too:
- Even with all the research in the world, the real estate market can be very unpredictable. It could take you a very long time to sell your home. Of course, unless you decide to sell as-is because that way, you can time both real estate transactions perfectly.
- Living in temporary housing can be emotionally and financially taxing on a family because of the high cost of rent and the uncertainty surrounding homeownership.
- Moving twice will result in you having to pay for movers a second time and the cost of storing your furniture. And don’t even get us started on the amount of stress involved.
Buying a new home first
You may find the ideal home before you sell your current one, and you cannot take the chance of losing it to someone else. Although it is a more challenging approach financially, you will still be able to accomplish your goal and buy a new dream home.
First, you’ll need to come up with the down payment and be able to afford two mortgages with the money you bring in. Or you might apply for a bridge loan, which demands a high credit score and a low ratio of debt to income. It is essential to keep in mind that this strategy is most successful in a market that favors sellers, where it is more probable that your house will sell quickly if the price is set appropriately.
However, as the real estate market can be unpredictable and you can lose more than you were willing to, consider selling to a cash buyer. This process works quite simply, and the best part about it is that you can decide when the best time to close the sale is. This means that you can time your sale and purchase in a way that works best for you.
Pros of buying a new home first
Here are the biggest benefits of buying a new home before selling your current one:
- This way, you’ll be getting your hands on your ideal home.
- You’ll avoid moving twice, which means you’ll reduce the money you spend on moving and, more importantly, the stress it causes you.
- The prices on the market could go up, which would result in a higher profit for you from selling your home.
Cons of buying a new home first
On the other hand, buying a new home first comes with a set of drawbacks:
- You’ll have to balance two mortgages which can be pretty tricky. Buying a new home first also means taking out loans with high-interest rates.
- You might be pressured to sell, which might harm the outcome of your negotiations.
- There’s always a possibility that market prices will go down, indicating that you paid a higher total price for your new home than what you can get for your old one.
So, will you sell your home or buy a new one first?
We hope our article helped you decide whether you should sell before you buy your next home or go the other way around. Make sure to consider the pros and cons of both options thoroughly. Only that way can you reach a decision that’s best for you. Remember that the easiest and the most flexible way to go is to sell your home as-is. That’s because you’ll completely control the sale, and you can decide when you want everything to be finalized.