Current market dynamics and personality can influence whether you choose to buy or sell first. In a buyer’s market, sellers are less likely to have issues with contingencies and may be willing to take more risks to sign a contract. A seller’s market favors buyers who have already sold their homes and can make a cash offer. As for personality, some people like to know that they can sell before they look to buy another home and others like to know where they are going to live before they sell their current home. There are benefits to each. Speaking to Anthony can help you better understand the current local market conditions and gauge a timeline for each option.
Before making the decision, the first question to ask is, “What is my home worth? The amount of equity that you have in your current home could have a large impact on the home that you are able to afford. Also, you’ll want to evaluate the mortgage for which you’ll qualify and your ability to carry those new monthly payments in addition to your current mortgage. It might also help to start to look for your new home. If you see a few options available that you can afford, it might be a safer option to put your home on the market.
Buying first offers the security of knowing where you are going before you sell your current home, but also comes with some risks. If you have very specific needs which could lead to a prolonged home search, like location, size, age or extended garage space for example, you might want to considerer finding your new home first. One risk is that it can be harder to get a mortgage for a second home.
This can be overcome by using a Home Equity Line of Credit (HELOC) to cover the down payment, but this only works with significant equity in your current home, assuming you have the ability to carry new monthly payments in addition to your current mortgage. Another possibility is that you might feel pressured to take a lower offer on your first home to avoid being burdened with long-term debt that you cannot afford.
Selling first offers the most control. If the buyer is agreeable, it might be possible to rent back your home for up to 60 days. It’s always possible to move into another short-term rental, although that adds the stress of moving twice and storing your belongings. If you do choose to sell first, you will not need a sale contingency which means you will have more power when negotiating your purchase price.