The benefits and drawbacks of buying first and selling first.
If you own a home and are looking to buy a new one, should you buy first or sell first? Today, I’ll go over both options.
If you try to buy first and you’re using the current equity in your home for your down payment, you’ll likely need to make an offer that’s contingent on the sale of your current home. In today’s marketplace, when sellers are getting multiple offers on their houses, no seller would consider a contingent offer.
Depending on how much equity you have in your home and your monthly income, you may qualify to purchase your next home before you sell. This is only an option if you can carry two house payments at once. You need to talk with your lender to make sure you qualify for this.
If you sell first, this will put you in the best position to buy your next home. If your down payment is coming from the sale of your home, you know exactly what you can afford. Once your home is sold, you can write an offer that doesn’t have a house sale contingency. That makes you more competitive in the marketplace.
In today’s seller’s market, you can negotiate a rent-back agreement at a low cost or sometimes for free. This is where the buyer allows the seller to rent the home back from them for a period after closing while they look for their new house.
Whichever option you choose, it’s critical to have a plan to make the process as smooth and profitable as possible. If you’re planning on buying and selling a home, give us a call at (650) 862-8603 so we can start forming a plan together.