If you're thinking about moving, you have to make a decision: do you buy your new home first and then sell your old one? Or sell first and then buy?
The biggest obstacle to selling first is that you may have to move twice - first into a rental, then again into the next home. Many buyers need to sell first in order to free up cash to purchase a new home. If you buy before you sell, making a contingent offer on the new home or taking out a bridge loan can make your decision, and the moving process, easier. But there are some important factors worth considering:
- An offer to purchase a new home that's contingent upon the sale of your current home can be "bumped" if another buyer makes an offer that is not contingent.
- To make the contingent offer more appealing to the seller, many buyers offer full price. But making a contingent offer may cost you negotiating leverage on both ends. A full price offer to the seller means you lose the ability to negotiate the sale price, and also puts pressure on you to accept a lower price on your current home in order to sell it quickly.
- A bridge loan provides interim financing to "bridge the gap" until your first home sells. It also means making two house payments until your old home sells, so you need to decide how long you will be comfortable paying for two homes at the same time.