Identifying whether you’re in a buyer’s or seller’s market is crucial because it directly influences whether selling or buying first is the smarter move. Timing your decisions around market trends can help reduce financial risk.
Jump to insightSelling before buying gives you financial clarity and avoids paying two mortgages, but it often means you’ll need temporary housing. Planning ahead for this transition helps reduce stress.
Jump to insightTools like contingency offers, bridge loans and rent-back agreements can ease the financial and logistical challenges of coordinating two transactions. Exploring these options with your agent ensures smoother timing.
Jump to insightEvaluate your local real estate market
Understanding your local real estate market is one of the most important first steps when deciding how to balance buying and selling. Market conditions directly affect timing, pricing and the strategies you should use.
- Determine the market type: Identify whether your area is currently a buyer’s or seller’s market. A buyer’s market means homes stay on the market longer and buyers have the advantage of more negotiating power. A seller’s market means homes sell quickly and often for higher prices, giving sellers leverage.
- Figure out the best timing: If you’re in a seller’s market, it may make sense to list your home first since it’s more likely to sell quickly. In a buyer’s market, you may want to secure your next home before selling, since finding the right property could take more time. Tracking trends such as average days on market, inventory levels and interest rates can help you identify the best moment to act.
- Adjust your approach: In a seller’s market, focus on preparing your home to attract multiple offers quickly, while also having financing ready to compete aggressively as a buyer. In a buyer’s market, prioritize getting preapproved for a mortgage so you can move quickly on good deals, while setting realistic expectations that your current home may take longer to sell.
Deciding to buy or sell a house first
In an ideal situation, you’d close on your new home a few days before finalizing the sale of your old one. But hold-ups are common, and market fluctuations are unpredictable, so it’s realistic to expect one or both sales to lag.
Option 1: Sell your current home first
If you sell your home before you’ve closed on your new one, you might not have anywhere to go. This could mean moving into a rental or staying with friends or family temporarily. On the upside, selling first gives you clarity on how much money you’ll have available for your down payment and purchase budget.
Pros:
- You won’t have to carry two mortgages at once
- You’ll know exactly how much you can afford for your next home
Cons:
- You may have to move twice — once into temporary housing, then again when you buy your new home
- Finding a new place quickly may feel rushed, especially in a competitive market
Option 2: Buy your new home first
If you close on your new home before you sell, you might end up with your old house sitting on the market for some time while you pay two mortgages. This strategy can be appealing if you want to avoid moving twice, but it comes with financial risks.
Pros:
- No need for temporary housing between selling and buying
- More time to find the right new home without feeling pressured
Cons:
- Risk of paying two mortgages if your current home doesn’t sell quickly
- You may feel pressure to accept a lower offer just to sell
Selling in a buyer’s market
A buyer’s market means homes are priced low and moving slowly, so buyers have an advantage. In a buyer’s market, a home can sit on the market for weeks or months (or even longer) before selling. If you buy a new home and then your old one doesn’t sell quickly, you’ll have to make payments on both in the interim.
Consider these tips if you’re selling first in a buyer’s market:
- Price your home correctly. If you’re looking to sell quickly, have your home appraised and offer a reasonable, fair price.
- Consider renting after you sell. You can’t know for sure how long it'll take to find a new place, so consider moving into a temporary apartment or rental house after you sell your home. This will give you time to shop around for available homes to purchase without feeling rushed.
- Ask family to help out. If you live near family or friends who can put you up, consider putting your belongings into storage and moving in with them until you find a new place. Of course, this is only an option if you feel like you and your loved ones could handle a potentially extended period of time in close quarters.
- Locate multiple suitable homes. Keep your eye on the available homes in your desired area, and keep a running list of suitable options.
Buying in a seller’s market
A seller’s market means homes are priced high and move quickly, so sellers have the advantage. In a seller’s market, homes sell quickly, especially when they’re priced reasonably. This is a great scenario for sellers but can be difficult if you’re also competing as a buyer while trying to purchase a new home.
Keep these tips in mind if you’re buying first in a seller’s market:
- Make your house attractive. In order to ensure nothing stalls your current home from selling, work on making home improvements with the best return on investment (ROI).
- Understand you may have to settle for less. If you buy first and have difficulty selling your existing home, you may end up settling for a lower offer than you originally expected. This can put you in a tough position if you purchased an expensive new house counting on the income from your sale. Keep this in mind when budgeting.
- Set a budget that assumes your home won’t sell quickly. If your home doesn’t sell right away, you’ll need to be able to cover two mortgages plus interest and upkeep on both properties.
- Find a mortgage lender with competitive rates. Finding a mortgage lender who can give you low interest rates is your best option financially. Work with a lender who specializes in the types of loans you qualify for, including FHA, VA and USDA loans. You may need to put less money down with an FHA loan, for instance, and refinance later to make sure you have enough money in savings to cover costs until you sell your house.
Ways to make buying and selling a house easier
As much as we’d like it to, the timing of buying and selling a house doesn’t always line up perfectly. If you’re concerned with financing or the timing of the process, consider the following tips.
Make a contingency offer
A contract contingency lets you request that the new home contract not be completed until your house sells. While this can be risky if there are other non-contingent offers to purchase the home you want, this strategy can work well in a buyer’s market.On the flip side, if you have an offer on your home and haven’t secured a new place yet but feel you’re close to making an offer, as the homeowner you can request to extend the closing date of the house you’re selling. This will give you more time to find the right place.
Get a bridge loan
Another option if you need to buy your new house before you’ve sold your existing home is what’s referred to as a bridge loan. A bridge loan is a short-term loan that can be used to cover the down payment on your new home until you secure longer-term financing (like the money from the sale of your old house). Keep in mind that bridge loans can be more expensive and harder to qualify for than conventional financing because they require greater risk on the part of the financier.Rent out your current home
If you buy first and have trouble selling, consider renting out your home instead. This can cover some or all of your home loan payment, and if you choose to offer it with a short-term lease you can still keep it on the market to sell.Stage your home to sell
Staging your home is a good idea regardless of whether you’re buying or selling first. The main purpose of staging is to give potential buyers a way to visualize how your space can be used. You can hire someone to stage your home for you or you can take a DIY approach. Here are some ideas:- Play up your outdoor living space. Outdoor living spaces are gaining popularity among homebuyers. Adding furniture, outdoor heaters and small landscaping details can make a big difference when potential buyers visit your house, especially if you live in a warm climate.
- Set a scene. Create a scene in each room to provide a narrative for your house. Set up a board game in your den or create a reading nook in the master bedroom. These small but important details can help homebuyers visualize themselves using your space and make it easier to sell your home quickly.
- Get rid of clutter. This is by far the most important thing sellers can do to entice potential buyers. Recognize that people who view your home will go through your things. They’ll look in cabinets and closets, and if they see tons of clutter, they could determine there’s not enough storage space. Organize your clutter using closet organizers and get rid of stuff you don’t need. If you still have too much stuff for your house, look into renting a temporary storage unit while your house is on the market.
Negotiate rent-back agreements
A rent-back agreement allows you to remain in your current home for a set period after closing, essentially renting it back from the buyer. This can give you extra time to find and close on your new home while avoiding the hassle of moving twice. Rent-back agreements are especially useful in a competitive market where buyers are motivated to accommodate sellers in order to secure a property.FAQ
What happens if I can’t sell my home after I’ve already bought a new one?
If your old home doesn’t sell quickly, you have options such as renting it out to cover costs, applying for a bridge loan or lowering the asking price to attract buyers more quickly.
Can I use the equity from my current home to buy a new one?
Yes. You may be able to use home equity through a loan, line of credit or bridge loan to fund the down payment on your new house. Be sure to weigh the risks and repayment terms before moving forward.
How can I reduce the stress of buying and selling at the same time?
Work with an experienced real estate agent, get preapproved for a mortgage early, declutter and stage your home before listing and explore temporary housing options so you don’t feel pressured by timing.
Bottom line: Should you buy or sell first?
The decision to buy or sell your home first is a tough one. Both options have pros and cons, and you should choose based on your personal financial situation, the housing market and what works best for your family. Talk to your real estate agent or financial advisor for more advice about your particular situation.
