Should I Sell my Current Home Before Buying the Next?

The decision to move-up in the real estate market can be both exciting and daunting. As a move-up buyer, you're likely looking to upgrade to a larger or more expensive home, but there's a significant question that needs addressing: Should you sell your current home first or buy a new one first? This decision can have financial and logistical implications, and in this blog post, we'll explore the pros and cons of each approach to help you make an informed choice.

Selling First: The Pros

1. Financial Clarity: Selling your current home before buying a new one provides a clear understanding of your budget for the new property. You'll know how much you can afford based on the sale price of your current home.

2. Reduced Financial Risk: By selling first, you avoid the potential burden of owning two properties simultaneously, which can be financially stressful.

3. Negotiating Power: You'll be in a stronger negotiating position when buying a new home because you won't have to include a contingency clause related to the sale of your current property in your offer.

4. Less Pressure: Without the need to rush into a new purchase, you can take your time to find the right home that meets all your criteria.

Selling First: The Cons

1. Temporary Housing: You might need to find temporary housing while searching for and closing on a new home. This can be an inconvenience and an added expense.

2. Market Timing: You may need to move quickly to secure a new home once your current one sells, which could limit your options in a competitive market.

Buying First: The Pros

1. No Need for Temporary Housing: You can seamlessly transition from your old home to the new one without the hassle of moving twice.

2. More Time to Move: You'll have ample time to move your belongings and settle into your new home without the pressure of a looming deadline.

Buying First: The Cons

1. Financial Uncertainty: Buying before selling can leave you with two mortgages, which can strain your finances. If your current home doesn't sell as quickly as anticipated, you may find yourself in a tight spot.

2. Contingency Offers: When making an offer on a new home before selling your current one, you may need to include a contingency clause, making your offer less appealing to sellers.

3. Stress and Pressure: Juggling the sale of your current home and the purchase of a new one can be stressful, especially if you're concerned about market conditions.

The Middle Ground: Bridge Financing

If you're unsure about whether to sell or buy first, consider bridge financing. This option allows you to access a short-term loan that covers the down payment on your new home while you wait for your current home to sell. Bridge financing can provide flexibility but may come with higher interest rates and fees.

The decision to sell your current home first or buy a new one first ultimately depends on your financial situation, market conditions, and personal preferences. It's essential to carefully weigh the pros and cons of each approach and, if needed, consult with a real estate professional who can provide guidance tailored to your specific circumstances. Remember that the right choice for one person may not be the best for another, so prioritize what aligns with your unique goals and comfort level in the real estate market.