What's the difference between buying first and selling first?
Selling first means you know exactly how much money you have before you buy, but you may need a short-term place to live. Buying first means you move once and on your schedule, but you may carry two homes for a while. Which risk you can handle decides it.
When does selling first make sense?
Selling first usually makes sense when you need the equity from your current home for the next down payment, when you can't qualify to carry two mortgages, or when you'd rather rent briefly than risk owning two homes. It's the lower-financial-risk path, with more moving logistics.
Recently, I worked with a seller who decided to sell before buying. They chose to rent for a year before making their next move. That isn't ideal for everyone. I've had sellers stay with family, but more often than not, we're able to line up the sale of their home with the purchase of the next one on the same day. Is it tough? Yes, but it's doable. Other options include bridge loans and rent-backs. The best one for you depends on your situation and your tolerance for risk.
When does buying first make sense?
Buying first makes sense when you can cover the new down payment and both housing payments without the sale, or you have a lender-approved plan that bridges the gap. It suits people with a fixed move date, or owners whose current home is likely to sell quickly once listed.
Can you buy and sell at the same time?
Yes. In my experience, more often than not we can close the sale of your current home and the purchase of your next one on the same day. The common tools are an offer contingent on selling your current home, a bridge loan or home equity line for the down payment, a rent-back that lets you stay after closing, and coordinated closing dates. Each one costs something in leverage or money.
Sale contingency
Your offer depends on your current home selling. It protects you, but it makes your offer weaker. In Connecticut this is often called a Hubbard clause. Right now, Farmington Valley sellers may look down on offers with one, but as the market shifts, more sellers will start to accept them so they too can move to their next home. We would put in dates that give you time to sell and show the seller we're working on a timeline. The seller can usually keep marketing their home, and if another acceptable offer comes in, you get a short window set in the contract to remove the contingency or step away (Steier & McCormick, CT real estate attorneys).
Bridge loan or home equity line
Borrow against your current home to fund the next down payment, then pay it off when you sell. Terms and qualification vary by lender.
Rent-back
Sell first, then stay in your home for an agreed period after closing while you buy.
Coordinated closings
Line up both closings on the same day or a few days apart. It takes cooperation from both other parties.