The question is usually "What comes first, the chicken or the egg?" but in real estate many times it’s a question of, "What comes first, the buy or the sell?"
You've decided that you are ready to sell your current home and buy a new home, but you aren't quite sure where to start. Do you buy a new home first and then sell your current home? Do you sell your home first and then buy a new home? Or are you the adventurous type that does both at the same time?
Option 1: Sell First, Then Buy
Sell your current home, then buy your new home. With this option, you have to first make living arrangements for after the sale of your current home. Maybe you have family members with room to spare or you're willing to do a short-term rental in the interim. Financially speaking, this is the most prudent approach, as you will not have the added burden of having to pay two mortgage payments for a period of time. Additionally, this provides you with the proceeds from the sale of your current home to help with the down payment and closing costs for the purchase of your new home. The downside? We did mention staying with family, didn’t we? Although this is a real blessing, you’ll also want to consider whether you will be wearing out your welcome if you stay with family too long. A short-term rental may be a decent solution, but they are expensive and may require some temporary lifestyle adjustments. That's a tough question to answer, but we're laying out a few scenarios to help you do just that.
Option 2: Buy First, Then Sell
Buy your new home, then sell your current home. If you decide to go this route, you have somewhere to call home while you are searching for and going through the process of buying your dream home. Another upside to this option? You can take your time packing and moving once you have closed on your new home, which can be especially good if your new home is in need of some TLC or upgrading before you move in. The downside? You're left paying two mortgages until your first home sells. Are you financially ready for this? As you can imagine, having realistic expectations and pricing your home properly are key aspects of taking this approach in order to complete your sale in a timely manner.
Option 3: Buy and Sell Simultaneously
Sell and buy at the same time. In this case you might think you've gone a little crazy, but with the right REALTOR® on your side, it is very doable. There are many upsides to this option, like not having to move twice, move in with family, or waste money on a rental property. However, buying and selling a home at the same time means you must balance two different transactions. It is also important to note, the seller of your new dream home may not be willing to accept your offer on their home contingent upon the sale of your current home. So negotiating strategy is key… If all plans go accordingly, your REALTOR® will negotiate the needed terms, work out the details and line up the closings for each property in a way that you close on your new home just hours before you close on your old home. With this option you have to be very organized and have a REALTOR® that is diligently working for you.
So, what comes first for you? The buy or the sell?