How to sell and buy a house at the same time

Juggling the sale of one home and the purchase of another simultaneously can feel overwhelming, but with proper planning it can be done. We put this guide together to help you understand the factors and options available to help streamline the process as you work with your mortgage lender and real estate agent to close on your new home while selling your current home.

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.

If you sell your home before you’ve closed on your new one, you might not have anywhere to go. If you close on your new one before you sell, you might end up with your house sitting on the market for some time while you pay two mortgages. While both situations are undesirable, you’ll have to anticipate one or the other based on your personal situation and the current housing market.

To begin, it’s helpful to know how much equity you have in your home so you can estimate a reasonable down payment for the house you’re buying and better understand what houses you can afford. The market is usually more favorable to either buying or selling a home (called buyer’s and seller’s markets, respectively), so at the very least you can try to predict which of the two sales will go faster. From there, it might make sense to buy first then sell or vice versa.

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.

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.