Buy or Sell First?

Once you have made the decision to sell one house and buy another you have to decide which should come first.  The right decision to this question will be different for everyone as personal circumstances will play a factor. 

Choosing to sell your current home first offers the advantages of knowing how much money you will receive at settlement.  It also offers the opportunity to use any profits from the sale towards the purchase of your new home.  Of course, this option can present some challenges as well.  If you sell your current home before finding a new home to buy you leave open the possibility of not finding a new home in time.  If this happens you will need to consider the possibility that you may have to find a temporary place to live until you find the house you wish to purchase. 

Choosing to buy a new home before selling your current one means that you will not have any potential profit from the sale of your home to put towards this new purchase.  You will need to use other means to come up with the down payment, closing costs, and any other fees incurred. Buying a new home before selling your current one also leaves open the possibility you will have two mortgages for a period of time.  You need to figure out before buying the new home if you can afford the two mortgages and for how long in case you cannot sell your current home quick enough to avoid this situation.

Market conditions can also affect the decision to buy or sell first.  It is important to remember that it is your local market conditions not national ones that will have the greatest impact on this decision.  Your real estate agent can provide you with the best information regarding current market conditions in your area.  A general rule, though, is that in a seller’s market you want to buy a new home first and then sell your current home and in a buyer’s market you want to sell your current home first and then buy a new home.  This can help you get the best deal possible both buying and selling because your working with the current market conditions and not against.

Most importantly remember that when you go to make this decision be sure you take both your personal circumstances and the local market conditions into account.