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Buy Before Selling?

Buying or Selling first – How do I decide?

Deciding whether to buy or sell first can be a tough decision. On one end, if you buy a new home first, you eliminate the anxiety of where you will live next. On the other end, there is the anxiety of how long it will take to sell your current home. In the middle, there is the high cost of owning two homes. How can you make the process a win-win decision?

Check your finances:

Understanding your financial situation will shine light into whether you can buy, or must sell first. Can your savings cover a down payment and closing costs on a new home?

If the answer is yes, then ask your mortgage lender if you qualify for the financing you will need without having your home sold.

If the answer is no, then ask your mortgage lender if you can borrow enough cash for a down payment and closing costs and still qualify for the financing you need to make the purchase. Your lender should offer you available options.

Many buyers cannot qualify for the mortgage they need to buy a new home without first selling their current home. In such case, market conditions will determine whether to can buy or must sell first.

Understanding market conditions:

Your real estate agent can help you understand how market conditions will affect your buy or sell first decision. Here are a couple of questions to ask about selling:

• On average, how long does it take to sell a home like ours?
• What’s the approximate inventory of homes for sale in my area? Homes like ours?

Consider that selling your home under a contingency to find a replacement home may not be viable option unless the inventory of homes for sale is very low. Buyers prefer homes that are definitely for sale, and not subject to a contingency. However, you may ask the buyers if they would consider an option to rent back your home from them for a period of time after closing.

Here are a few questions to ask about buying:

• On average, how long does it take to find a home to buy?
• What’s the approximate inventory of homes for sale in the area I’m looking to buy?
• Are listings selling with multiple offers, or can I take my pick?
• Is it possible to buy contingent to having accepted an offer for the purchase of my current home?
• If I had to move to an interim rental, how much would that cost me? What is the availability of homes for rent in the area I’m looking to buy? If I needed storage, how much should I expect to pay?

As you know now, deciding whether to buy or sell first is not an easy decision. Your mortgage lender and your real estate agent can help you make an educated decision.