Looking to sell your home this year and move into a new one? Those are two massive tasks! And while today’s hot housing market might make selling your home easier, it could also make buying one much more challenging—and potentially tangle you up in a financial mess.
Since no dream home is worth getting stuck with two mortgages, it’s important to sell your current home before buying a new one (we’ll explain more behind the why later). But for now, let’s go over how to buy and sell at the same time.
Don’t know where to start? We’ve got you covered.
5 Steps for Buying and Selling at the Same Time
To feel confident about tackling these two huge tasks in a tight turnaround, follow these steps:
1. Plan Your Schedule
First, work with an experienced real estate agent who can help you understand the challenges and benefits of buying and selling a home in your current market. You and your agent can start with a discussion on current real estate trends. Then you’ll have a grasp on how much your home will sell for and how much you can expect to pay for your new home.
Find expert agents to help you buy your home.
With a clear understanding of your real estate market and the professional advice of your agent, you’re ready to make a plan. Start by answering these questions with your real estate agent:
- What’s my ideal timeline? At what point in my home-selling process should I begin looking for my new home? How long should I expect my home-buying process to take?
- What’s my budget? Based on the expected sale of my home, how much can I afford to pay on my next house? How much of a down payment can I make? Can I pay in cash, or do I need to plan ahead for financing?
- Can I make the transition at once? Or do I need to plan for a gap between closing on the sale of my current house and my move-in date for the new one?
2. Prepare Your Home for the Market
Now you’re ready to put your plan into action! Keep in mind, your agent will help you with most of the tasks below to get your house ready to list.
Hire a Home Inspector
Have a professional inspect your home for anything that may need to be fixed before listing it on the market. Better to find out what the issues are now than to wait for a buyer’s inspector to uncover them for you—throwing a wrench in your timeline.
Set the Stage
Get a professional to stage your home and create a warm and inviting atmosphere that helps prospective buyers picture themselves living there. Consider hiring a professional cleaning service so everything is spotless and smells nice. And don’t forget curb appeal—you’ll need picture-perfect photos to get your home noticed online.
Price It Right
Buyers will pass on a home that’s priced too high, without even taking an up-close look. So what’s the secret to perfect pricing? Start by taking the emotion out of the equation. No matter how much you think your home is worth or what you owe on your mortgage, it’s the market that matters. A real estate agent can run a comparative market analysis to show you how much homes like yours are selling for in your area.
3. Sell Your Home
Once your home is ready for the market, your agent can get it listed and scheduled for showings. Now you’re ready to sell your house! With a well-prepared home and this hot market, plenty of offers will head your way. Your agent can help you comb through the offers and negotiate a contract that benefits you and your timeline.
At this point, you might be itching to make a move on your own new home. But stay focused on tackling everything that needs to be done to sell your current home until you reach the closing date. Any delays could complicate your transition to a new home.
4. Fill the Gap Between Selling and Buying
By now, you should have a clearer idea of how long it’ll be between closing the sale of your current home and when you can get the ball rolling on your new one. If you didn’t have any luck negotiating enough wiggle room in the sale of your home, you may need to find a temporary place to stay and store your stuff (which will probably include budgeting for rent).
If that’s the case, blast out a massive social media message or get the word out at your workplace or community group to alert everyone you know that you’re looking for a rental. Maybe you can strike a discount and avoid being forced into a rigid lease term. This way, you can be free to move as soon as you land a new home.
For more on how to fill the gap between selling and buying, here are other ideas:
With a rent-back agreement, the buyer of your home agrees to allow you to stay in your home for a period of time (60–90 days) after the sale is final. In exchange, you allow for a lower selling price or rent paid to the buyers. This can relieve some of the pressure of finding a temporary place to stay and give you additional time to house hunt.
This might sound like a big ask, but buyers in a competitive market are often willing to be flexible with sellers if it means their offer is the one that gets accepted.
Another option is a contract contingency. This is when you make an offer on your new home that states your purchase is contingent (or dependent) on the sale of your current home.
While the contingency protects you from having to pay on two mortgages, it can be a risky play in a strong seller’s market. With sellers often receiving multiple bids for their homes, an offer with too many contingencies can easily knock you out of the running—and an unsold home is just about as big as a contingency gets.
Bad Options to Avoid
Don’t be fooled by options your lender may offer to "help" you cover the financial challenges of buying and selling a home at the same time. These are loans that simply multiply your risks:
- Bridge loan: A bridge loan allows you to tap into the equity of your current home to pay the down payment on your new home. It’s basically a short-term loan that has to be repaid quickly. Here’s the catch: Payments are much larger than a long-term loan. And if you pay late, the penalties and fees are much larger too. Debt always creates risk. And bridge loans are extra risky because they’re tied up with the unpredictable timing of two home sales. That’s a financial burden you don’t need.
- HELOC: This loan also gives you access to your home’s equity so you can use it on the down payment of your next home. But the HELOC (Home Equity Line of Credit) is dangerous because it usually comes with call provisions. This means your lender can demand you repay the entire loan in full—within a one- or three-year cycle! That could put you in a position where you’ll scramble to get a loan to avoid foreclosure. Bad plan.
5. Buy Your Next Home
Congrats—you sold your old home! Now you’re ready to follow some steps on how to buy a house. First, find a buyer’s agent—or use the same real estate agent you sold your home with. Next, determine your down payment (do at least 10–20%) either from your savings, the profit on the sale of your home, or both. If you can’t buy with 100% cash, get preapproved for your mortgage to avoid unexpected surprises that could delay your tight timeline.
We recommend you never buy a house with payments that cost more than 25% of your monthly take-home pay. That 25% limit includes principal, interest, property taxes, homeowner’s insurance, private mortgage insurance (PMI)—and don’t forget to take homeowners association (HOA) fees into consideration. Use our mortgage calculator to enter your down payment amount and try out different home prices within your budget.
From there the steps are pretty straightforward:
- Go house hunting.
- Submit an offer.
- Get a home inspection.
- Close on your house!
Why Buying a House Before Selling Yours Is a Bad Idea
You might be so focused on getting a new home that you prioritize buying one before selling your current home. If this means you’ll pile a second mortgage on your back, you definitely shouldn’t buy before you sell.
Sure, buying a new home before selling your current home would make it easier to move. You wouldn’t have to worry about where to store your stuff or where to stay. But an easier move isn’t worth the risk and potential complications of having dual mortgages.
Below are the main reasons why you don’t want to buy a new home before selling your old one:
- Getting another mortgage could be tricky. Qualifying for a new mortgage will be more difficult, if not impossible, if you’re still tied to your current home mortgage—or if you’re relying on the sale of your current home for the down payment on your new one.
- Your home might take too long to sell. Maybe you could actually handle paying two mortgages for a month or two. Still, a home sale takes time. Depending on your home, it could sit on the market for months or even a year! That’s a quick way to drain your emergency fund for something that isn’t a real emergency.
- Emergencies could destroy your finances. With two homes (and mortgages) on your hands and no savings in the bank, it’s just a matter of time before you get hit with a busted water heater or leaky roof that’ll require immediate attention—and money.
Is It Ever Okay to Buy Before You Sell?
If you follow the plan we teach at Ramsey Solutions and have reached Baby Step 7 and are living and giving like no one else, by all means, pay cash for that new home and worry about selling your other one later.
Not sure if you’re there yet? Ask yourself these questions:
- Are you debt-free?
- Do you have 3–6 months of expenses in your emergency fund?
- Is 15% of your take-home pay going toward retirement?
- If you have kids, are you contributing toward their college fund?
- Is your current home paid off?
- Do you have enough cash to put 100% down on the new house?
If you can’t say yes to all of the above, then hold your home-buying horses. No home is worth putting your financial security at risk. For the rest of us, the safest and smartest plan is to sell before you buy.
Can I Sell and Buy on the Same Day?
With the help and coordination of an expert real estate agent, you might be able to sell your current home and close on your next home on the same day. However, keep in mind that a same-day closing will require perfect timing on three different timelines—yours, your buyer’s and your seller’s.
Realistically, closings are often delayed for lots of reasons—maybe your buyer has difficulty getting a mortgage or your home inspector finds issues that need to be fixed before you move into your new home.
So don’t put all your hope into selling and buying on the same day—have a plan B to reduce the gap between closings as much as possible.
Find Agents to Help With Selling and Buying
With a little patience, a lot of hard work, and an experienced real estate agent as your guide, you’ll be placing that Sold sign in your yard and buying a new home in no time. For a quick and easy way to find agents we trust, try our Endorsed Local Providers (ELP) program. We have strict standards for recommending agents who share our values—so you’ll only get the best.