Selling Your Home Before You Buy a New Home

5 Things You Should Know to avoid costly pitfalls

Buying a new home before you sell your current home is definitely the preferred option, if you can financially afford to do so. 

But buying a new home before you’ve sold your current home can also have some costly pitfalls.

If your home doesn’t sell right away, or the sale is delayed or falls through, you may end up owning two homes and making double mortgage payments. That can put a lot of stress on your family’s budget.

In this blog, I share three benefits to buying first, and two strategies that will help you avoid some potentially costly mistakes.

The Benefits of Buying Before You Sell

Time. In today’s seller’s market, buying a new home is definitely the tougher half of the equation. Buying your new home first gives you ample time to find the right home without the pressure of closing and moving out of your current home.

Convenience. You may be able to wait to list your home until after you’ve moved out. This is especially helpful if you need to refresh or update your home to get the best sale price. You can postpone repairs until after you move and avoid the inconvenience of living in a construction zone.

Increased sales price. Let’s face it, most of us don’t live in show houses. If you can wait to sell your home until you move out, your Realtor® can stage your home to show it to its best advantage. Research shows homes that are well staged sell for 5 to 7 percent more.

The Risks of Buying First

Buying your new home before selling your existing home does come with some risks, however. You could end up owning two homes and making two mortgage payments for weeks or even a few months. Here are two strategies for avoiding those pitfalls.

Strategies to Limit the Risk

Be ready. If you home does not need major repairs or updates, take steps to make sure it is ready put on the market as soon as you sign a purchase agreement on your new home. Clean, declutter, and make any minor repairs so you home looks its best.

Have a financial safety net. Even if you have enough in savings for the down payment on your new home, you want to make sure you have extra funds available if you do end up making double mortgage payments or you need to make repairs to your existing home in order to sell it.

Talk to your lender about getting a bridge loan or taking out a home equity line of credit and do it even before you even start looking for your hew home.

Having financial peace of mind will help relieve the stress of buying and selling.

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

Before you make the decision to sell your home first and then buy, make sure you check out my next blog in this series, Selling Before You Buy. In it I share what you know if you plan buy first before you sell, including a couple of strategies for staying in your home longer after its sold.

 

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