So recently, I shared that we sold our Pittsburgh home and also gave you tips if you plan on selling your house too. If you missed that blog post, you can read that first and come back over here. All caught up? Great!

So what comes next after selling a house? Buying the next house, a.k.a. HOUSE HUNTING! Well, some do the reverse and buy a new house first before they sell their current house.

In real estate, both have their pros and cons. So let’s discuss each below.

*Back patio of the Pittsburgh House we recently sold

Buy New House Before Selling OR Sell First?

When you buy a new house before selling, you can approach it in two ways:

1. You can go through the normal/traditional buying process: find a house, make an offer, negotiations if any, offer acceptance, inspections and appraisals, loan/title transfer/underwriting process, and then finally closing the sale. Once the inspections, appraisals and loan application are all good, you can start selling your house. If your house sells right away, there’s a good chance you only have 1 month where you’ll pay your current mortgage AND the mortgage in the new house.

   But there’s a chance that if you sell your house in the middle of buying the new house that you won’t have to pay for 2 mortgages in a month. Usually, when you buy a house, it won’t be until the following month that you have to pay for your first mortgage. On the other hand, if your house doesn’t sell for weeks or months, you’ll be paying for two mortgages – making this the biggest CON when buying a new house before you sell your current house. However, there’s a way to get around this.

2. The second approach is that when you make an offer on the new house you’re buying, you can add what they call in real estate, a contingency, to your offer.

   This means that before a deal is complete, an additional criteria must be met. You can say that you’re offering xx amount on a house, contingent to the sale of your own home. The good thing about this is that you won’t end up paying for two mortgages. But the problem with this approach is if there are multiple offers on the new house you’re buying, the seller might prefer other offers than yours because they can close the sale sooner.

Cons of Buying Before Selling

1. If you take the first approach above, the biggest disadvantage of buying first is the potential two mortgage payments you’re gonna be paying until you sell your house.
2. The second disadvantage is that when you get a pre-approval letter from your bank/lender that shows how much you can afford, it could be less because you still have your current house that you’re paying for.

   Some lenders can say we can pre-approve you with a higher amount as long as you sell your other house before closing the sale on the new house.

3. Another potential disadvantage is that your mortgage interest rate might be higher because of the two houses you’re going to be paying for until you sell your current house.

Pros of Buying Before Selling

1. You won’t end up homeless if you sell your house first. So you don’t need to move to a rental first or stay with family or parents for example.
2. You don’t have to rent a storage unit for your furniture especially if you have a lot of stuff.
3. There’s no urgency with the packing and moving out of your house.

Cons of Selling House First Before Buying

1. You might end up homeless for a few weeks or months if you sell your house right away and can’t find a new house you like.
2. You might need to rent a storage unit until you find a new house.
3. You’ll have to get out of the house every time there’s a scheduled open house or if someone is requesting to view the house.
4. You need to keep your house clean, organized and ready for viewing at all times. It has to look presentable when you’re trying to wow potential buyers!
5. There’s urgency to move out once your house is sold.
6. You’re kinda MOVING TWICE – first move is when you move out of the house to your temporary place, and the second is from the temp space to your new house. It gets harder when you can’t find a house you like or lose on bids.

Pros of Selling Before Buying

1. You won’t be paying for two mortgages.

   Thus, less worry about two payments if your house is sitting longer in the market than expected.

2. You can have a bigger budget with the income from the sale of your home.
3. It’s easier to get pre-approved, get a better mortgage rate and approved amount from your lender or bank.

Of course these are just some of the basic scenarios when buying a new home and selling your current home. There are other factors to consider especially if you’re moving cross-country, or even harder, when you’re moving to another country. The real estate market and timing/season are also some factors to consider. So ultimately, these are just guidelines to help you decide whether to sell or buy first.

Good luck!

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