Should you sell your existing home before purchasing a new one, or vice versa?
By Andrew Roth
July 10, 2007
Q: My neighbors just sold their home, and now are scrambling to find something to to buy before they have to vacate. When selling a home, Is is better to sell first, then buy, or vice versa?
A: This is a question I come across frequently, and it’s one of the most important, and potentially stressful questions you’ll need to answer when selling your home.
Unfortunately, there is no “right” answer. Each pursuit has its own benefits and drawbacks, and the best answer is usually closely tied to the particular seller’s unique situation and sensitivities.
Generally speaking, the benefits of selling before buying include: 1) Having the advantage of knowing your sale price, and therefore, your budget for your new home; 2) In some cases, having cash in the bank makes you a more attractive buyer to a potential seller.
Once you’ve sold your home, however, the timeframe to make a replacement home purchase decision is quite constrained (approximately 60-90 days from contract ratification). If you are unable to purchase a new home in that timeframe, you may be forced to find rental housing for an interim period and essentially deal with the inconvenience and expense of moving twice.
Buying before selling, on the other hand, gives you the flexibility to find and move into your perfect replacement property when you’re ready.
This stress-reliever is replaced, however, with the pressure of selling your original home quickly and at a price no lower than your original expectations. Buying before selling likely means there will be a period where you must service dual housing expenses, and your targeted sale price will also be at risk due to the whims of a changing market.
The right answer is generally tied to each seller’s particular sensitivities as well as the market dynamics at any point in time. For instance, if you have school-aged children who must begin their school year in a new school district, the desire to purchase within a tight timeframe may outweigh the trouble of managing the sale of your original home during or after you’ve comfortably made your move. However, if you’re looking to trade up to a more expensive property, it might make more financial sense to lock in the proceeds from a sale before jumping into your next property, even if it means you have to live “between homes” for a period of time.
All of these decisions, however, must be made in the light of the current housing market in which you are selling and buying. Your considerations and strategy may change if the general market is active, with property selling quickly, and prices rising, or if the market is stagnant or slowing, with properties staying on the market longer.
There’s no approach that’s best or most-reliable for all sellers at a particular point in time. Should you be contemplating a sale and purchase in the near future, it would be my pleasure to help chart a course that will best meet your needs.
Please feel free to contact me directly for additional advice on buying or selling your home.