Should You Sell Your Home Before Buying Your Next?

Wahi REALTOR® Barb Funt provides shares advice to help you decide whether to buy your next home or sell your current home first.

By Josh Sherman | 3 minute read

Homebuyers often ask whether they should buy a new home or sell their current home first.

One of the big decisions facing anyone looking to purchase their next home is whether they should buy or sell first. 

Ultimately, says Wahi Realtor Barb Funt, there’s no one right answer for everyone. “It’s different for everybody,” she says.

In general, though, Funt says the decision begins with answering a simple question: Do you need to sell first to know how much you can afford to spend on another home? “That’s the first evaluation that you do,” says Funt. 

When You Should Sell Before You Buy

If what you will sell your current home for determines your budget for the next, you should sell first — “hands down,” says Funt. By selling first, there won’t be any unknowns about your budget, and you’re able to use the sale proceeds for your next downpayment.

You’ll also be under less pressure to sell, so you can afford to wait for the right offer, maximizing the sale price. If you’re unable to sell, you can always relist later.

A good strategy would be to list your home for sale during the busier seasons for real estate, typically fall and spring. Not only does this increase the chances of your home attracting more bids, it also positions you to buy at a time when the market is typically less competitive. 

“If you sell something in the fall, you’re kind of getting into a good time to buy because you’re heading into the winter — except not as many people list,” Funt cautions. “Timing is really important,” she adds. 

Funt recommends speaking to a realtor early on to find out whether the type of home you’re looking for is likely to be available within your budget after you sell. “You need to make sure there are properties on the market.”

When You Should Buy Before You Sell

If you have a lot of equity in your home — or your mortgage is already paid off — buying before you sell could be an attractive option.

“Buying first is probably smart for people who don’t have the financial problem and can go buy and it doesn’t really matter what they sell their home for,” Funt explains.

For homebuyers with considerable equity, buying first sidesteps one of the main drawbacks with the sell-first approach: being tied down to a move-out date when you start your house-hunting journey.

Buying first isn’t without risk, though. “When buying first, your risk is you’re not going to sell, so you need to know your numbers. The numbers are really, really important,”  Funt cautions.

Another main advantage of buying first is you can spend as much time as you like finding a property that’s just right. “Just make sure that you have enough of a closing date to sell and give yourself a little bit of time,” says Funt.

Note that if you’re unable to sell your home after buying and you can’t afford the carrying costs of both properties, there are potential options.

Homebuyers in this position can seek bridge financing. “A bridge loan is a temporary financing option. It is designed to help homeowners ‘bridge’ the gap between the sale of an existing home and the purchase of a new one,” according to RBC. “You can use the equity in your current home for the down payment on your next property while you wait for your home to sell.”

However, Funt says, you’ll need “really good credit” to qualify for this type of loan, and not all lenders offer it. “That’s a conversation that the homebuyer should have at the very beginning,” Funt recommends.