Can I Buy a New Home Before Selling My Current Home?
One of the most common questions I hear from homeowners who are thinking about moving is:
“Can I buy my next home before I sell the one I’m living in?”
The answer is yes — and in many cases, buying first can make the moving process much easier. The bigger question is whether it makes financial and strategic sense for your particular situation.
If you own a home in Chicago or the surrounding suburbs and are considering a move, here are the most important things to understand.
Why Do Homeowners Want to Buy Before They Sell?
The biggest reason is simple: you don't want to sell your home and then have nowhere to go.
Selling first can put you on a deadline. Once your current home is under contract, you may have only a few weeks to find another property, negotiate the purchase, complete inspections, secure financing and close.
That can create pressure to compromise on the location, condition or features of your next home.
Buying first can give you more control. You can find the right property, move at a more comfortable pace and prepare your old home for sale after you've moved out.
The challenge is figuring out how to make the finances work.
Do I Need Enough Cash for Two Homes?
Not necessarily.
Many homeowners assume they can't buy until they receive the proceeds from their current home. However, there may be several ways to access the money needed for the next purchase.
Depending on your finances, these could include:
Qualifying for the new mortgage while still owning your current home
Using a home equity line of credit (HELOC)
Using a bridge loan
Borrowing against certain investment assets
Making a smaller down payment and applying sale proceeds to the new mortgage later
Structuring the purchase around the expected sale of your current property
The right approach depends on your income, existing mortgage, available equity, cash reserves and the requirements of your lender.
This is why I recommend speaking with a knowledgeable lender before beginning the home search. You may have more options than you realize.
What If I Can't Qualify While Carrying Two Mortgages?
This is one of the biggest concerns for homeowners who want to buy first.
Even if you have substantial equity in your current home, your lender will still look closely at your income, debts and ability to carry both properties.
If qualifying for two mortgages isn't possible, selling first isn't necessarily your only option.
A lender and your Realtor can work together to explore alternatives and determine whether the timing of the sale and purchase can be coordinated.
Can I Make My Purchase Contingent on Selling My Current Home?
Yes. A home-sale contingency can make your purchase dependent upon selling your existing property.
This can reduce your financial risk, but there is a tradeoff.
In a competitive market, a seller may prefer an offer from a buyer who doesn't need to sell another property first. If multiple buyers are competing for the same home, a home-sale contingency can make your offer less attractive.
That doesn't mean you shouldn't use one. It means the strength of the local market and the particular property you're pursuing should be considered before deciding how to structure your offer.
What Happens If I Buy First and My Home Takes Longer to Sell?
This is the scenario you should plan for before making an offer.
Ask yourself:
What happens if I own both homes for 30, 60 or even 90 days?
Your budget should account for more than two mortgage payments. You could temporarily be responsible for two sets of property taxes, insurance, utilities, assessments and maintenance expenses.
A good move-up strategy isn't based solely on the best-case scenario. We should understand what happens if the sale takes longer than expected.
Could Buying First Actually Make My Current Home Easier to Sell?
Absolutely.
Once you've moved into your new home, your existing property can often be prepared for the market without disrupting your everyday life.
That may make it easier to:
Declutter and clean the home.Rooms tend to show larger and better with fewer belongings.
Complete repairs and improvements.Painters, contractors and cleaners can work without interfering with your schedule.
Stage the property.An empty or partially empty home gives you greater flexibility when deciding how it should be presented.
That convenience can be especially valuable when the goal is to generate as much interest as possible during the first days your home is on the market.
What About Selling First and Renting Temporarily?
That's another option, particularly if you're unsure where you want to move or don't want the financial responsibility of owning two properties.
Selling first gives you certainty about exactly how much equity you have available for your next purchase.
The downside is that you may have to move twice — first into temporary housing and then into your new home — along with potentially paying for storage and short-term housing.
For some people, that's worth it. Others would rather accept some short-term financial overlap to avoid moving twice.
What About Closing Both Homes on the Same Day?
It's possible, and transactions are sometimes structured so the sale of your existing home occurs shortly before the purchase of the new one.
However, back-to-back closings require careful coordination.
A delay involving your buyer's financing, inspection, appraisal or closing could potentially affect your purchase as well.
This is one reason your Realtor, lender and attorneys should understand the entire plan from the beginning rather than treating the purchase and sale as two unrelated transactions.
So, Should You Buy or Sell First?
There isn't one answer that works for everyone.
For someone with substantial equity, strong income and adequate reserves, buying first may provide the most flexibility and least stressful move.
For someone who needs the proceeds from their current home to qualify for the next purchase, selling first or carefully coordinating the two transactions may make more sense.
And sometimes the best strategy depends on the properties themselves.
If your current home is likely to sell quickly but the type of home you're looking to purchase is difficult to find, buying first could be advantageous. If you're moving into an area with plenty of inventory while your current property could take longer to sell, the strategy may be different.
Start With a Plan — Not a Home Search
If you're thinking about moving, one of the biggest mistakes you can make is falling in love with a new home before figuring out what you're going to do with your current one.
Before we start looking at properties, I like to answer three questions:
What is your current home realistically worth?
How much equity should you expect to have after selling?
What purchasing options does your lender give you if you buy before you sell?
Once we know those answers, we can build a strategy around your finances, your timeline and what's actually happening in your local real estate market.
Thinking About Buying and Selling at the Same Time?
You don't have to figure out the timing on your own.
Contact me and we can put together a buy-before-you-sell strategy based on your current home's value, your available equity and the type of property you're hoping to purchase.
Sometimes the question isn't “Can I buy before I sell?”
It's “What's the safest and smartest way for me to do it?”
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