Whether you sell your current home before you go under contract with another home should depend on your financial situation, how long you expect it to take to move your household, how hot the market is in your location and the availability of homes currently on the market where you want to live. It’s possible to both buy and sell a home simultaneously, and that’s the ideal scenario. However, that’s rarely how the process works. You have to do what makes sense for your individual circumstances.
Why Selling First Can Benefit You
Most people want to sell their homes before agreeing to purchase another one. It allows you to have a clear and concise picture of your finances before entering into a new mortgage. The stress of preparing your home for sale, making repairs, making concessions, and the actual process of selling your home is over before you start house shopping. Dealing with one transaction at a time is much less stressful, and you can focus on getting the best deal for your family.
When you sell first and the proceeds from the sale of your last home are in your hands, you can move quickly on the purchase of another property. Offers you make look rock-solid to sellers too, because they know you’re going to be without a home soon. Nobody wants to get into a six-month rental lease so they have somewhere to live between selling and buying a home. When you’ve already sold your home, sellers know you need to move quickly. They trust your offers and are motivated to push sales through rapidly.
When most buyers make an offer on a home, it’s with the contingency that their home sells for a price that allows them to purchase a new property. When you have money in hand from the sale of your home, you can take that contingency off the table. It’s one less factor that can throw a stick in the spokes of a moving real estate deal. If you want to look like a serious buyer, selling your house first helps.
If you need to tap into the equity you have in your current property to be able to afford a down payment on your next property, selling your home first before buying the next home is the most logical option. Selling first also makes sense if you know that selling your property is going to take a while and you can’t afford to pay mortgages on both properties.
Why Selling First Can Hurt You
Selling your home first before purchasing another one can sometimes come with unintended consequences. Selling your home means you almost always need to be out of the property within 30 to 60 days. If you don’t have a signed contract on your next property, you’re going to need somewhere to live.
Rent payments can cost more than mortgage payments, and having your credit checked to secure an apartment to live in temporarily can throw off your credit score. If your score is in danger of being too low to secure a mortgage or get the most favorable rates on your mortgage, it might be a good idea to try to perfectly align the timing of the sale of your home with the purchase of your next home. If need be, you could be stuck staying in a hotel with weekly or monthly rates until your home purchase is complete.
Living in a home that’s going through the selling process is stressful. You have to keep your house spotlessly clean, devoid of clutter, and in perfect condition during the sales process. That’s extremely difficult to do if you have a young family or pets. Undoubtedly, the process of selling your home without having a new place to move to can be difficult under these circumstances.
When you sell your home first, you could be setting yourself up to pay high prices for temporary housing. The purchase of your next home could be rushed, and you might accept subpar conditions just to get into a home. You’ll also have to move all of your belongings into storage and then again move them into your new home. If you hire movers to do this, you’ll be paying that price twice, not to mention the cost of storage units.
If you’re a property owner contemplating your next real estate purchase, let a Potempa Team member help guide you through the best course of action for your situation. Contact us today to get started.
