Which Should You Do First?

Buy a Home or Sell Your Home

You want to buy a new home and you need to sell your home. Are you feeling confused about which step comes first? You are not alone. 

This chicken-and-egg question is one of the first stumbling blocks that move-up, downsizing, and right-sizing buyers have to confront.

Especially in this market, it can be tough to simultaneously navigate both buying and selling without making costly mistakes. 

In this video, I outline the questions you need to answer to determine which scenario is the right you so you don’t end up losing out on a house you love, making double mortgage payments, or worse, stuck between homes with nowhere to live.

Stick around until the end of the blog to learn the very first step you need to take in the home buying process.

Assess Your Financial Resources

Sometimes the decision of whether to first buy a new home or sell your current home is determined by your financial situation. The first question you need to answer is do you the financial assets and/or equity in your current home to qualify for a mortgage or pay cash for a new home?

If not, then you will likely need to sell your existing home before buying a new home. 

What Kind of Risk Are You Comfortable Taking?

If you are one of the fortunate homeowners who have sufficient equity or cash assets to purchase a new home before selling, the next question you need to answer is what type of risk are you comfortable taking?

In this low-inventory seller’s market, buying your new home first is a great option. Buying first allows you plenty of time to find the right home. And once your offer is accepted, you’ll know exactly when you’re closing and when you can move into your new house.

What you won’t know is how long it will take to sell your current house. Houses are selling quickly in this market, but not all sales always close on time, and offers sometimes fall through. If you have to relist your home, or make some improvement to it to get the price you want, you may end up having to make two mortgage payments for one, two or several months.

Have a Backup Plan

If you sell your existing home first, you may be in a better financial position to make a stronger offer on a new home, but finding the right home in this market can be tough. You may have to offer on several homes before you get an offer accepted, and you may feel pressured to by a home even if it isn’t exactly what you want.

If the sale of your current home closes before you’ve  closed on your new home, you’ll need to have somewhere to stay. And given that the rental market in the Twin Cities is as tight as the housing market, that could be tough. You may need to rely on friends and family. Are they willing to put you up?

Deciding whether you should sell your current home or buy a new home first typically comes down to your finances and the type of risk your comfortable taking. 

Now for my insider tip. No matter whether you decide to by or sell first, the very first step you should take is to meet with a loan offer and your financial advisor to find out what your options are.

J Trout Lowen is a Minneapolis Realtor® and an expert at helping homebuyers and sellers navigate the Twin Cities real estate market.

Still unsure if buying or selling first it right for you. I go into deeper detail my next two video blogs, Selling Before You Buy and Buying Before You Sell

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