It’s a common real estate predicament: selling the home you currently live in while trying to buy a new one. So… what’s the most efficient way to go about it?
All in all, it depends on your situation. Are you willing to buy a second home without having sold your first one? Or are you relying on the payoff from your current home for the down payment on your new one? Are you relocating? Upgrading? Downsizing? Your reasons for selling will most likely dictate how you’ll go about the process.
So, here are four things to keep in mind when you’re buying and selling a home at the same time.
It’s All About Timing
What works best for you? If you’re selling your home because you’re relocating to a new area, it might more more sense to sell your current home first before buying a new home in a new market.
However, if you have enough money saved up for a down payment, it may be easier to buy your new home first, then sell your old home once you’ve moved to the new one.
So Do Your Research
A great place to start is by researching the market. If there are a lot of buyers and not a lot of homes, this is called a “buyer’s market”, meaning the conditions are ideal for buyers. Oppositely, if there are a lot of buyers and not a lot of homes, the conditions favor sellers (a “seller’s market”). If you’re buying and selling in two different markets, you’ll have to research both.
If you opt to buy before selling, make an offer on the new home with a sale and settlement contingency. You can then request an extended closing.
And Consider Your Money, Money, Money
Look closely at your bank account; what is it telling you?
The answer to your current question (Should I buy or should I sell first?) most likely lies within. Begin by meeting with your financial advisor or mortgage lender.
You’ll want to look at three main financial factors: a) The amount of money you have in liquid cash, b) The equity in your current home, and c) The amount of the new loan you qualify for.
A big part of this is knowing the resale value of your current home. It’s also a good idea to have a pre-inspection completed on your home, so you can take care of any maintenance issues that might deter potential buyers down the road… and maybe even bump up your home value a bit
Your Equity is Also Crucial
To find the equity on your home, take its current market value and subtract what’s left on your mortgage.
Need to know the current market value of your home? Use our home evaluation tool! Please reach out to us to learn more.
Work With the Right Realtor®
Even if you’re not buying and selling a home at the same time, the right Realtor® can transform your real estate experience. A great local agent has the expertise and resources you need for a streamlined, stress-free, and successful real estate transaction.