Moving Up or Downsizing: Can You Afford to Buy and Sell at the Same Time?
Whether you’re moving up to a larger home for your family or downsizing from the family home now that the kids are grown up and out of the house, buying a home while selling your current one is stressful. Should you buy a new home before you sell your old one? What if you need to carry two mortgages or move in with your in-laws?
When you’re moving up or downsizing, you must first decide whether to buy your new home or sell your current home first. Both options have advantages and disadvantages and will affect how you approach the home buying process.
Selling Your Current Home First
Selling your current home before buying your next one has some benefits. If your home is already sold, you’ll be able to offer a clean bid on your new home without a contingency clause that stipulates your offer is dependent on the sale of your current home. It also will likely make it easier to qualify for a mortgage on your new home, as you will not need to carry two mortgages.
However, if you sell your home quickly, you may be left without a place to live if you are not able to find a suitable new home before you pass papers. That may mean asking the in-laws if you can move in for a while or finding a short-term rental. Or, you may ask your buyer for a rent-back, where you rent your current home from them until you find a new home.
Buying Your New Home First
When you buy your new home before accepting an offer on your current one, you do not have to worry about finding temporary housing. But you’ll likely need to add a contingency clause to any offer you put in on a home. If your home is in escrow or on the market when you make an offer on a new property, sellers are likely to continue to take your offer seriously.
But if you haven’t listed your home yet, sellers may disregard your offer as too risky. If your offer is accepted, you may find yourself on the hook for two mortgage payments—one for your new home and one for your current home while it’s still on the market. Some lenders may find this situation too risky to lend to you.
Before You Start Shopping
Whether you choose to buy or sell first, set yourself up for success with these smart tips.
- Ask your Realtor® to research the comps in your neighborhood and your target neighborhoods.
- Get preapproved or even pre-underwritten for a mortgage.
- Have your current home appraised so you can price it accurately and competitively.
- Prepare your family and home for a quick move.
- Find several good options in case your first choice falls through.
Buying and selling at the same time can be stressful and challenging, but an experienced Realtor® can help you through the process. If you’re thinking about moving up or downsizing, contact Brooks Johnson, your friend in real estate, today.