The Pros & Cons of Buying a Home Before Selling

Pros:

• Flexibility in Timing: Purchasing a new home before selling your current one gives you more time to plan your move. This means you can do pre-move-in tasks like cleaning, painting, renovating, and decorating without the pressure of coordinating two closings at once.
• Control Over Market Timing: By buying first, you can wait for the ideal market conditions to sell your home and maximize your sale price. This strategy allows you to hold out for a better offer, rather than feeling rushed.

Cons:

• Risk of Double Mortgage Payments: The biggest risk of buying before selling is carrying two mortgages at once. If your old home takes longer to sell than expected, you may find yourself struggling with the financial strain of two mortgage payments, property taxes, and utilities.
• Uncertain Finances: Selling your current home first provides you with funds for a down payment on your next home. Buying before selling means you don't have that financial cushion, and there’s always the risk that your old home won’t sell for the price you expect.

Four Tips to Make Buying a Home Before Selling Work

If you decide to buy a home before selling yours, here are four tips to help make the process as smooth as possible:

1. Partner with an Experienced Real Estate Professional

Navigating the complexities of buying and selling simultaneously can be tricky. An experienced agent like Diane Walker can help you manage both transactions. Diane will assist in coordinating the logistics, reviewing market data, and understanding your financial situation. She’ll help you determine if it’s realistic to expect your old home to sell before you buy, and guide you through both the buying and selling processes.

2. Get Pre-Approved for a Mortgage

It’s essential to get pre-approved for a mortgage before you start house-hunting. This will give you a clearer idea of your budget and strengthen your position when making an offer. Additionally, ask your lender about bridge loans—a financial product that can help cover the gap between buying your new home and selling your current one.

3. Understand Your Timeline

The timing of both your purchase and sale is crucial. First, prepare your current home for sale—this may include staging, repairs, and upgrades. Next, start searching for a new home, ideally with a condition of sale that allows you to back out if your current home doesn’t sell in time.

You’ll also want to plan out the closing process for both properties. Timing your closings to align as closely as possible can save you from carrying two mortgages for an extended period.

4. Consider Bridge Financing

If the closing dates for your old and new homes don’t line up, you can use bridge financing to help you close the deal. A bridge loan allows you to borrow against the equity in your current home to fund the purchase of your new one. Keep in mind that bridge loans tend to have high interest rates and are typically only available if you have firm offers on both properties.

How Does the Market Affect Buying a Home Before Selling?

In a competitive market, buying a home before selling can be advantageous. With increased demand and low inventory, you can use the equity in your current home to secure bridge financing, allowing you to make an offer on your next home without the pressure of selling first. Once your old home sells, the proceeds can be used to pay off the bridge loan.

Conclusion: Can You Buy a Home Before Selling Yours?

While buying a home before selling yours can be complicated, it’s possible with the right approach and guidance. Working with an experienced professional like Diane Walker can help ensure that both transactions move forward smoothly. From coordinating the closing dates to navigating financial options, Diane’s expertise will help you make informed decisions throughout the process.

If you’re ready to buy and sell, Diane Walker is here to guide you every step of the way, ensuring you achieve your homeownership goals in today’s dynamic market. Reach out today to get started on the next chapter of your real estate journey.