Should You Sell Your Current Home Before Looking For a New One?

If you already own a home and you’re thinking about moving, one of the first (and most emotionally loaded) questions you have to answer is whether or not you want to sell your current home before you start shopping for the next one.

On the surface, it seems like a straightforward financial decision. In reality, a mix of timing, personal comfort, market conditions and how much uncertainty you’re willing to live with for a while all come into play.

In other words, there’s no universal right answer – just the answer that’s right for you. The best choice depends on your finances, the local housing market and how flexible your life can be during the transition period. Understanding the pros and cons of each choice can help you make the decision.

The Case for Selling the Old House First

For many homeowners, selling before buying feels like the safer, more controlled option, because one of the biggest advantages to selling your existing home before you buy the next is financial certainty:

• You’ll then know exactly how much equity you’ll have available for a down payment. That clarity can make shopping for the next home a lot easier. You’ll have a clear idea of your price range.
• You become a more attractive buyer. Sellers sometimes worry that a deal will fall through when a buyer’s offer depends on selling another property. 
• You reduce your financial risks. Carrying two mortgages, even temporarily, can strain anybody’s cash flow and increase their emotional stress. By selling before you buy, you avoid the pressure of making double housing payments while waiting on a buyer.

There’s also an emotional benefit to selling your current home before you buy the next. Once your current home is sold, you can shop for the next one with a clear head. You’re not trying to juggle showings, negotiations and repairs in the old house while also imagining your future somewhere else. If you already feel pressed for time and your energy feels spread far too thin, selling first might be the mental breathing room you need to make everything manageable.

The Case Against It

Before you decide to go that route, however, make sure you look at the potential downsides of selling first, too. The biggest issue may be the need for temporary housing. 

You can ask potential buyers to give you a specific amount of time to find your next home before they take possession – but that may somewhat limit interest in your home. Even if you get a contingency clause that gives you 30, 60, or 90 days to find a home, you will have to pay rent to your buyer and hope you find something before the time runs out. If you don’t, you’ll likely have to put your household goods into storage, find temporary housing and move again when you do find your next home. That can get costly.

Another risk is rising home prices or interest rates. You should take a good look at the market when you’re making this decision. If interest rates are going up or the housing market in your desired area is “hot,” waiting to buy until after you sell your existing home could mean paying more for the next one.

The Case for Buying the Next House First

Buying your next home before you sell the existing one can certainly be more physically convenient, and it definitely has its appeal. It allows you to move directly from one home to the next, with no worries about a temporary stop somewhere in between. If you have pets, children, work from home or don’t live in an area where you can easily find affordable temporary housing or have somewhere you can stay, this could be the only viable option. 

You also gain a few other advantages:

• You can take your time finding the right home, negotiate without any additional emotional pressure and plan your move without worrying about strict timelines. If your schedule is already loaded and you need stability, this can be important.
• Buying first can also be a smart strategy in tight inventory markets. If homes are scarce and competition is fierce, being ready to move quickly can help you secure a property you love before it disappears. Once you’re settled into your new home, you can focus on selling your old one without the pressure of an immediate deadline.
• You may find it easier to sell. Buyers need to imagine themselves in a home before they make a bid. If you’re already in your new place, you can empty the old one, make repairs more easily and stage it so that it looks its best. That could result in higher offers.

You can also take advantage of the existing market. You know what the real estate market and mortgage interest rates are right now. You don’t know what they may look like in a few months. If you like the current market, you can jump while the conditions are stable.

The Case Against It

So, what’s the drawback to this plan? You’re taking a different kind of financial risk. Until your current home sells, you will be responsible for two mortgages, two home insurance policies and two sets of utilities. 

Financing your next home, too, can be more complicated. You may need a “bridge” loan or have to pull from a home equity line of credit or use contingency clauses to make buying first possible. You’ll need stronger credit and a bank that’s willing to work with you to make these possible.

You also have to physically maintain both homes, whether that means making sure that two yards are mowed or getting the leaves out of two sets of gutters. That can be a lot of work.

Finally, this route is always filled with uncertainty. If you can’t emotionally tolerate a lot of unknowns with no clear end date, this probably isn’t the best way to go for you. If your home doesn’t sell quickly or the market suddenly shifts in a way that’s disadvantageous to sellers, you could find yourself stuck in this position for a while and under a lot of pressure to reduce the price on the home you’re selling just to find a buyer – any buyer.

Finding the Right Strategy Requires Some Introspection

Before choosing a path, step back and think about your wants and needs. Can you comfortably handle two sets of housing bills for several months if needed? How would that affect your stress level and lifestyle? Are you open to temporary housing, or would that cause major upheaval or even be impossible to find? Do you have pets and children, school schedules or work arrangements that limit your options? How well do you tolerate risk? Shopping for a new home is unquestionably different when you’re already a homeowner. You’re no longer the wide-eyed, first-time buyer who is new to the whole process. But you also have different financial, physical and logistical decisions to make this time around. Ultimately, the decision is all about priorities, whether that’s getting the maximum price for your current home, minimizing your stress or sheer convenience. Talk it over with your REALTOR® and let your priorities guide your decision.