Start by understanding the market
The state of the real estate market should factor into your decision on whether you need to sell the house before you take on another one:
In a buyer’s market, don’t roll the dice…List your home first
In a buyer’s market, inventory’s high (usually in excess of 6 months), there’s downward pressure on prices, and homes are on the market longer. That means you could list your home first, assuming that it won’t necessarily sell right away, and shop for your new home in the time it sits on the market. Ideally, you would then try to align the buy-and-sell transactions to save you from moving twice.
Sell your house first
Selling your home first is the most straightforward approach when you’ve got two transactions in the balance. It’s more practical financially since you’ll know exactly what your budget is for the new home with all repairs, home preparations, and fees accounted for.
However what this path lacks in financial risk, it makes up for in emotional risk. You’ll potentially have to move twice and make due with temporary accommodation for the interim which could be stressful.
- Buying with a set budget:
You know exactly how much money you have to buy with.
- Financing is simple:
Use the cash from your sale as a hefty down payment; borrow the rest the same way you did for your first mortgage.
- Reduced pressure:
Negotiate confidently for top sale price on your current home; take your time finding the right home.
- Benefiting from market shifts:
Prices could always drop if you wait too long to sell, so if the timing is right, don’t hesitate to strike while the market’s hot.
- Missing out on your dream home:
Say goodbye to the manifestation of your Pinterest goals, the dream home goes to another buyer if the timing doesn’t work out.
- Living in temporary housing:
Rent is expensive and homeowner limbo can be emotional and stressful on your family.
- Moving twice:
You’ll pay twice for movers plus the cost of storing your furniture.
- Risking the market:
Prices in the market could rise, so you comparatively pay more for your new home than you made from your old one.