Should You Sell Your Home Before Buying Your Next One?
If you’re thinking about moving, you may be asking yourself one of the biggest questions we hear from homeowners:
“Do I buy my next home first, or sell my current home first?”
There isn’t one answer that works for everyone. But if you need the equity from your current home to purchase your next one, there can be some significant advantages to selling first, especially in a market where homes may take longer to sell.
After helping many clients coordinate a sale and purchase over the years, we’ve found that sometimes accepting a little inconvenience between homes can actually make the purchase of your next home much easier.
Why a Contingent Offer Can Be Difficult
Ideally, you might like to find your next home, write an offer contingent upon selling your current home, close both transactions around the same time and move directly from one house into the other.
When everything lines up, that’s great.
The challenge is getting the seller of the home you want to buy to accept that contingency.
A seller isn't just evaluating your offer. They're also evaluating the likelihood that your home will sell and close successfully.
If your home isn't already under contract, that can create additional uncertainty for the seller. And if you're selling in another city or state, it can be even more challenging. The seller and their agent may not understand your local real estate market, how long homes typically take to sell there or how accurately your home is priced.
That uncertainty can make your offer less attractive compared with another buyer who doesn't have a home to sell.
Selling First Gives You a Clear Budget
One of the biggest benefits of selling first is certainty.
Instead of estimating what your home might sell for, what your closing costs will be and how much equity you'll have available, you'll know.
Once your home closes, you know exactly how much money you have available for your next purchase.
That can make it much easier to decide:
- How much you want to put down
- What monthly payment you're comfortable with
- How much cash you want to keep in reserves
- Whether you want to pay cash or finance part of the purchase
- What price range makes the most sense for your next home
There is a big difference between thinking you'll have a certain amount of equity and actually having those proceeds available.
You Become a Stronger Buyer
This is another important advantage.
Once your home has sold, you can typically write an offer without a home-sale contingency.
That can make your offer much more attractive to a seller.
It may also give you more negotiating power when it comes to price, closing costs, repairs, credits or other terms.
Even in a market where buyers have more negotiating opportunities, sellers still want certainty. An offer from a buyer who is ready to move forward can carry considerably less risk than one that depends upon another home selling first.
You're Not Carrying Two Homes
Buying first can create another concern: What happens if your current home doesn't sell as quickly as you expected?
You could find yourself temporarily responsible for two mortgage payments, two property tax bills, two insurance policies and the expenses associated with maintaining two homes.
For some homeowners, that's manageable.
For others, it's exactly what they're trying to avoid.
Selling first removes much of that uncertainty.
But Where Do You Live Between Homes?
This is usually the biggest objection we hear:
“I don't want to sell my house and have nowhere to go.”
That's completely understandable, and it needs to be part of the plan from the beginning.
Depending on your circumstances, there may be several options. You could negotiate a rent-back from your buyer, stay in a short-term rental, live temporarily with family, or place your belongings in storage while you search for your next home.
Is moving twice ideal? Probably not.
But sometimes a few weeks or months of inconvenience can put you in a much better financial and negotiating position when purchasing the home you really want.
And that's why we look at the entire move, not just the sale of your current house.
This Can Be Especially Helpful When Moving Out of the Area
We've worked with many homeowners who are selling in one market and purchasing in another.
These transactions require even more planning.
If you're selling your home in Temecula, for example, but purchasing in another part of California or another state, the seller of the home you're buying may know very little about the Temecula real estate market.
Rather than asking that seller to trust that your Temecula home will sell, it can be much more powerful to approach them with your home already sold and your equity available.
It simplifies your offer and removes one of the seller's biggest unknowns.
Selling First Isn't Right for Everyone
There are situations where buying first may make perfect sense. You may have enough cash to purchase without selling, qualify comfortably while carrying both homes, or find a seller willing to work with your contingency.
That's why we don't believe in a one-size-fits-all approach.
Before putting your home on the market or starting to shop, we like to sit down and map out the entire process:
What could your current home realistically sell for? How much equity should you expect to walk away with? What will you need for your next purchase? Where are you moving? What is that market like? And what happens if the timing between the two transactions doesn't line up perfectly?
Once you have those answers, the decision becomes much clearer.
Plan the Move Before You Make the Move
If you're thinking about selling your home and buying another, you don't necessarily need to start by touring houses.
Start with a plan.
After more than 20 years helping buyers and sellers throughout the Temecula Valley, we've coordinated many moves where homeowners needed the proceeds from one home to purchase the next.
Sometimes the best strategy is selling first. Sometimes it's buying first. And sometimes we can structure the transactions so they happen very close together.
The important part is knowing your options before you're under pressure to make a decision.
If you're considering a move in Temecula, Murrieta or the surrounding Temecula Valley, whether you're moving across town, downsizing, relocating out of the area or even leaving California, we're happy to help you map out the numbers, timing and logistics.
You don't have to know exactly where you're going yet. You just need to know what your options are.
Lori & Matt Cutka | The Cutka Team
Temecula Valley Real Estate Experts
Helping local homeowners buy, sell and plan their next move for more than 20 years.