Selling 101: Buy First or Sell First

This is a question that comes up all the time: Should I buy first, or should I sell first?

Four Options

There are basically four options that can happen: Buy First without contingency, Buy First with contingency, Sell First without contingency, Sell First with contingency. I'll cover each of the four and help describe the pros and cons of each.

Buy First without contingency

Buying a home without a contingency of the sale of your current home is one of the main options that people choose. This allows you to go out there and just purchase another home, and then take the time to get your home on the market and sold. There is less pressure with the sale of your home, but you could end up owning two homes for a little while. In a sellers market, though, this isn't usually a problem as houses tend to sell like hotcakes. In a buyer's market you need to be prepared to own two homes for a while, perhaps a few months. Also keep in mind that you will have to be qualified from the mortgage perspective to own two homes.

Buy First with contingency

If you attempt to buy a home with it being contingent on the sale of your home, it can be problematic. The main issue is that sellers are not necessarily sure about what will happen with your home so they may not accept an offer with a contingency. In a sellers market, they won't have to as there will most likely be another offer that does not have a contingency attached. So if you have to buy with a contingency, you may not get the home.

Sell First without contingency

Selling your home first, and then starting your search for a new home can be nerve wracking. This is because you will not be certain that you'll find a home that you want to purchase before closing on the sale of your house. But if you have a place to go, such as relatives or friends or family, it's a good option. This option gives you the most flexibility knowing that your home is already sold, and you can take the time to make a non-contingent offer on the home you are purchasing.

Sell First with contingency

A buyer that is trying to purchase your home may not like it when you throw a contingency on the contract. The contingency would be something along the lines of "subject to the seller finding a home of their choice within 14 calendar days." This is especially true in a sellers market because it can be hard to get a home when there are competitive offers on almost every home.

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