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Buy First, Then Sell? Or Sell First?

Buy the Home You Want Before Selling?

Benefits: This approach permits you to wait until the right home becomes available. You will have plenty of time to shop without the pressure of an impending move date.

Risks: There is a significant financial risk to this approach. You could end up owning two homes for a long period of time. Your loan fees may be higher, especially if a bridge loan is necessary. And your purchasing power may be limited, restricting your home choices.

Your Best Choice: Buy first if you have a very specific type of home or location in mind, the supply of such homes is limited, and you are willing to bear the cost of owning two homes for a while.

Reduce Risks: Consult the experts. Ask us about the realistic market value of your current home. Meet with a good lender to get pre-approved for a loan that doesn’t require you to sell first. Take the time to learn all the costs involved, including monthly carrying costs. Use conservative estimates in your calculations. We’ll then help determine if you can find what you want for a price you can afford. Prepare your home to sell. You might be able to avoid temporary financing altogether if you get an early offer. Don’t fight the market; if you don’t receive an offer on your home quickly, lower the asking price.

Sell Your Current Home Before Buying Another?

Benefits: This is the safer approach. You will know exactly how much money you will have to invest in a new home, and you won’t need to carry two mortgages. You will also pay fewer loan fees, and you will be a stronger buyer.

Risks: Your biggest risk is in not finding a home you want before you must move out of your old home. You may incur higher moving costs if you move into temporary housing and require storage for some of your belongings. And you may “settle” for a home just to avoid moving twice.

Your Best Choice: Sell first if you don’t have much equity in your current home or you are on a tight budget, if the supply of replacement housing is good, if you know that you are ready to sell regardless of the availability of replacement housing, or if moving into temporary housing is acceptable to you.

Reduce Risks: Consult the experts. We’ll show you the availability, both now and expected, of homes meeting your requirements that are generally available in your price range. And you may be able to rent your current home from its buyer for a short period of time. Have a backup plan.

Make a Purchase Offer Contingent Upon the Sale of Your Current Home?

Benefits: This is the safest approach, but that comes at a cost. You are not obligated to buy the new home if your current home does not sell in the agreed upon time.

Risks: You may lose the home if another buyer comes in with a non-contingent offer and you are not able to proceed with your agreement without selling your home. Another risk is that you will overpay for the new home. Think of it this way: How much more would you demand from buyers who asked you to assume the risk that their house won’t sell?

Your Best Choice: Make a contingent agreement if the premium you will pay for the new home means less to you than the risk of outright buying first or selling first.

Reduce Risks: Consult the experts. Subtle variations on this approach may work for both the seller of your next home and you. Get serious about selling your home.

Sell first, or buy first? There is no simple answer. Select the scenario that is best for you, and then take the steps to reduce the risks.