How to Sell and Buy a House At the Same Time: Which First?

Posted by Justin Havre on Tuesday, July 16th, 2024 at 3:18pm.

How to Buy and Sell a House At the Same Time

You’ve got a house you need to sell, and a house you need to buy. But which transaction should you close first? Buying a house before selling and selling your house before buying both have pros and cons.

Deciding whether to sell your current home or buy a new home first can impact your finances, timeline, and overall stress levels during the transition process, so it's essential to weigh the pros and cons of each scenario, keeping in mind your specific needs and circumstances. As you navigate this pivotal next step in your homeownership journey, remember that thorough research and guidance from real estate professionals can help you reach the best choice for you.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

Should You Sell Your Home or Buy a New Home First?

Consider selling your home first to avoid unnecessary financial strain.
Selling first provides more budget clarity for home shopping.
Buying before selling can offer convenience but saddles you with two mortgages.
Buying first means you only have to move once.
Evaluate your finances and consult with real estate professionals for tailored advice.

Challenges of Buying and Selling a House at the Same Time

No matter which transaction you’re planning to complete first, balancing the demands of buying and selling a house simultaneously can be complex, even for experienced homeowners.

Limited Buying Power

When buying and selling a house simultaneously, limited buying power can pose significant challenges in securing your desired home within budget constraints. Your purchasing power may be constrained as you rely on the funds from selling your current home to finance the purchase of a new one—a limitation that can impact your ability to make competitive offers or explore homes at the top of your budget range.

If you’re relying on funds from your home sale to make a down payment on your new home, you’ll likely have to make your offer contingent on your previous home selling. This can make your offer less attractive in a competitive market.

If you’re buying a home before selling, your current mortgage may affect your debt-to-income ratio when you’re getting approved for your second mortgage. In addition, you can never be completely sure how much your current home will sell for, which will affect your new home budget. You may have to apply for a bridge loan to secure a home before selling your previous one.

Coordinating the timelines of both transactions is crucial to avoid financial strain and ensure a lower-risk transition.

Balancing Home Showings with Home Buying

How can you effectively manage the coordination of home showings while navigating the process of buying and selling a house simultaneously?

Coordinating showing your home and attending home showings can be daunting. Juggling multiple appointments and conflicting schedules with real estate agents is often overwhelming. To balance this, prioritize setting a clear schedule. Coordinate with your real estate agents to align showings and meetings efficiently, using technology like scheduling apps to streamline the process. Better yet, consider grouping showings in specific time blocks to maximize efficiency.

Ultimately, communication is key. Ensure all involved parties are aware of your availability and preferences. Flexibility is crucial, as unexpected delays or changes may occur. By staying organized, communicating effectively, and being adaptable, you can navigate the challenges of managing home showings while buying and selling a house simultaneously.

Home Sale Doesn't Go Through

Facing a failed home sale while simultaneously trying to buy and sell a house can present significant uncertainties. A collapsed home sale can result in financial setbacks, emotional stress, and potential legal issues.

The risk of a home sale falling through can disrupt your plans for buying a new home and cause delays. If your home sale doesn't go through, you may face difficulties securing financing for your new home purchase.

Dealing with a failed home sale while buying a new home simultaneously can complicate your housing situation. With that in mind, it's crucial to have contingency plans in place to mitigate the impact of a home sale not going through when selling and buying a home concurrently. Be prepared for the possibility of setbacks, and consider seeking professional guidance from a trusted real estate agent to navigate these challenges.

Buying a House Before Selling

Pro: No Rush to Buy

Once the first house is sold, most homeowners want to move into their new house as soon as possible—especially if they're not able to find a feasible rental home to live in while they're looking. This can make for a rushed home-buying experience, which can lead to settling for the wrong house or getting a house for a less-than-optimal price.

When you’re not pressured by temporary housing expenses or relying on home sale proceeds to make your down payment, you have the luxury of time. This means you can wait for the perfect property that meets all your needs and preferences rather than feeling pressured to settle for something less ideal. This flexibility allows for more thorough inspections, better negotiation on price, and overall, a less stressful buying experience. You can move forward at your own pace, ensuring you make a well-considered decision on your new home.

Con: Having Two Mortgages

If you buy your new home before selling your old one, there’s a period in the middle where you’re the owner of two houses. This means double the homeownership expenses—property taxes, homeowners insurance, utilities, and, possibly the biggest hurdle, mortgage payments.

Selling before buying lets you focus on a single mortgage, eliminating the stress of juggling two payments simultaneously. This approach helps you avoid the additional costs and complexities of owning two properties at once, preventing potential risks and uncertainties by concentrating on one transaction at a time.

Pro: Better Moving Schedule

Buying a House Before Selling Lets You Take Your Time Moving

One significant advantage of buying a new home before selling your old one is the flexibility it provides for your moving schedule. You only have to move once, which simplifies the logistics and reduces the stress associated with multiple moves.

You can pack up and move on your schedule, without the pressure of having to vacate your old home by a specific closing date. This allows for a more organized and gradual moving process, giving you time to sort, pack, and transport your belongings at your own pace. Additionally, this flexibility can help you avoid the added costs and inconvenience of temporary housing or storage solutions, making the entire transition smoother and more manageable.

Selling Your House Before Buying

Pro: No Rush to Sell

Once a property is purchased, most homeowners feel great pressure to sell their home quickly. Selling the house before buying the second house enables you to take your time and accept the best offer instead of taking the first offer that comes along.

Selling before buying allows you to wait for favourable market conditions and negotiate better terms without the pressure of needing immediate funds for a down payment or needing to get rid of a second mortgage payment. You can invest time in staging (and save money by using your own furniture that hasn’t been moved yet) and making necessary improvements to your property, potentially increasing its market value.

By not being rushed, you can ensure that you are getting the best possible price for your home, which can provide you with more financial flexibility for your next purchase.

Con: Where to Live Between Selling and Buying?

Selling a House Before Buying Another Means You Have to Find Temporary Living Accommodations

The obvious complication of selling before buying: where do you live in the meantime? Each option has its pros and cons, so it's essential to weigh them carefully to ensure a smooth transition.

Staying with family or friends can provide a temporary housing solution for some. Short-term rentals and hotels are another, though the costs can quickly add up—especially if your belongings are being stored in a rented storage unit.

One option to consider is negotiating a lease-back agreement with the buyer of your home. This arrangement allows you to stay in your sold home for a specified period, typically in exchange for paying rent, giving you more time to find and close on your new home. This also allows you to only move once, rather than twice, saving you the associated costs and stress.

Pro: Make a Stronger Offer

Many homeowners have a hard time deciding how to proceed with the purchase of a new house if they don't know what they can expect to make from the sale of their first home. Selling the house first enables homeowners to know for sure how much home they can afford to buy.

When you sell your house before buying a new one, you position yourself as a more attractive buyer in the eyes of sellers. Knowing your exact budget gives you the confidence to make a solid, competitive offer on your new home without the uncertainty of awaiting the sale of your current property.

This certainty can streamline the buying process, as you won't need to include a sale contingency in your offer. Without the sale contingency, your offer is less complicated and more appealing to sellers, who often prefer deals that are more likely to close quickly and without hitches. This can give you a significant advantage in competitive markets, helping you secure your ideal home more efficiently.

In addition, after the first house is sold, home buyers may have a great deal of cash from the sale. This makes it easier to make a larger down payment and a stronger purchase offer on the home they really want to buy. Putting down more money showcases your commitment, boosting the seller’s confidence in the transaction. Depending on how much equity you have and the cost of your new home, you may even be able to make an all-cash offer.

Knowing the sale profit also makes it easier to make moving decisions, like whether you can afford to hire a full-service moving company.

Tips for Selling Your Home Fast Before You Buy

To sell your home quickly before buying a new one, consider selling to a cash buyer for a faster transaction. Collaborate with a skilled listing agent to market your home effectively while prioritizing necessary repairs and upgrades to enhance your home's appeal.

Sell to a Cash Buyer

Consider selling to a cash buyer for a swift and potentially hassle-free transaction. Being in a rush to sell is one of the biggest reasons people sell for cash! Cash buyers can offer a fast turnaround, usually closing within two weeks, expediting your selling process and freeing you up to concentrate on buying your new home. On the other hand, cash buyers can offer a flexible closing schedule so you’re not rushed.

By eliminating financing contingencies, cash buyers streamline the sale, providing a smoother experience. Additionally, cash buyers often purchase properties as-is, saving you time and money on repairs and renovations. This can be particularly beneficial if you're aiming to sell your home swiftly before purchasing a new one.

Working with a cash buyer can reduce the stress associated with traditional selling methods, giving you more peace of mind. So, if you're looking to sell your home efficiently and without the typical delays of financing, getting a cash offer for your home might be the ideal solution.

Work With a Good Listing Agent

Selling and Buying a House At the Same Time is Easier With a Good Real Estate Agent

Consider partnering with a highly experienced listing agent to minimize the time it takes to sell your home before buying a new one. Look for an agent with a proven track record of selling homes quickly—someone who understands the local market dynamics. This expertise allows them to price your home competitively, attracting potential buyers. You can sell your home fast without leaving money on the table.

A good listing agent will assist you in staging your home effectively to showcase its best features and appeal to a broader audience. They should have a robust marketing strategy in place to reach a wide pool of potential buyers, increasing the chances of a quick sale.

Additionally, a skilled agent will negotiate on your behalf to secure the best possible sale price. By working with a top-notch listing agent, you can streamline the selling process and put yourself in a favourable position before purchasing your next home.

Be Strategic With Repairs & Upgrades

Before listing your home, prioritize repairs and upgrades that offer the highest return on investment while also taking your timeline into account. Focus on cosmetic updates like fresh paint, decluttering, and landscaping to quickly attract buyers.

Consider minor renovations in key areas such as the kitchen and bathrooms to enhance your home's overall appeal. You may want to collaborate with a real estate agent to pinpoint the most cost-effective improvements that can significantly boost your home's sale price.

Your goal should be to create a clean, well-maintained, and welcoming environment that resonates with potential buyers during showings. By strategically investing in these upgrades and repairs, you can increase your home's market desirability and help buyers envision themselves living in the home.