This is a question almost every homeowner looking to move asks themselves. Should I sell my home and then buy, or should I buy and then sell? There is no “right” answer for every homeowner. The answer depends on your specific circumstances as well as the market conditions. But we believe it’s better to sell first and then buy. Here are some reasons why:
- Money in the Bank: If you sell your home first your money will be in the bank which will improve your negotiating position when you’re ready to buy. You also won’t be under any pressure to sell your home if you’re not already under contract to buy a home. An offer contingent on the sale of your current home is less desirable in a seller’s market. When you’re under contract to buy a home contingent on the sale of your current home you’re also more likely to make expensive concessions you wouldn’t otherwise have to make.
- If You’re Buying in a Seller’s Market: As I write this article in March 2022 it’s a very competitive market. Not just in Los Angeles County where I live or Orange County where my office is, but in most states across the nation. Right now most agents are receiving multiple offers on their listings and sellers are asking buyers to remove their contingencies (loan contingency, inspection contingency, appraisal contingency, etc) If you still have to sell your home to purchase the home you want you’ve now put up one more roadblock to getting your offer accepted.
- If You’re Buying in a Buyer’s Market: If homes are staying on the market longer, as is typical in a buyer’s market, you may be better off selling your home first. If you try to buy a home before selling your current home you could end up accepting less for your home than you want just to make the sale work. Unless you have cash on hand to purchase your next home, you’re going to need to get a loan. And, if you qualify for both loans, you could end up with two mortgage payments while you wait for your home to sell.
- You Could Do a Concurrent Closing: In the simplest terms, a concurrent closing is where you do two closings back-to-back. This can help to ensure that you have the funds to close on your new home. Basically, you attend the closing on the home you’re selling, sign documents, and funds are transferred to the title company that is handling the closing on the home you’re buying. Then, you turn around and do the closing on the house you’re buying. Preferably, a concurrent closing is performed at the same title company. A concurrent closing typically happens on the same day or within several days of each other. Again, this is harder to accomplish in a seller’s market, but it can be done.
- You Want to Move But You’re Not Ready to Buy: This is another instance where you may want to sell your current home before you buy your next home. This happens to buyers for a number of reasons. For example, some school districts require that you live in the community for a particular amount of time before your children can be enrolled in the school you want. If you’re in a seller’s market it may be difficult to find the home you want and you may want to rent a property until you find just the right place. Many sellers want to rent for six months to a year before they buy. They want to make sure they like the neighborhood before they commit to buying a home in the area. Buying a home in an area only to find out you don’t like it could end up being very expensive.
Whatever you decide, make sure you’re working with an agent who is experienced. We’ve been in real estate for over 20 years and can help you achieve your home selling and buying goals.
