What You’ll Learn
Pros and cons of buying your home first and selling your home first
Steps every homeowner should take if they plan to buy and sell
How the Better Cash Offer program can smooth your transition from one home to the next
You sell your current home. Use the proceeds to buy a new one. And move from one home to the next with no stopover in between. It seems easy enough to do on paper, but it’s only doable if the timing of a buyer closing on your current home, and you closing on a new home, is all within your control. Odds are the decision of whether to buy first or sell first will come down to your finances.
Here we explore what you need to know for buying and selling, plus how to have your cake and eat it too:
To understand what you’ll be up against you need to know what the real estate market is doing in your area. In a seller’s market, homes can fly off the market in days as buyers try to outdo each other in cut throat bidding wars. In a buyer’s market, properties can stay on the market for weeks, maybe even months, and it can get increasingly difficult to predict when a serious buyer will come along (and if you can sell for the price you want).
Obviously the dream is to sell in a seller’s market and buy in a buyer’s market—and if you’re moving to a new area you might get lucky. But assuming the real estate market does not manifest the way you hope, it’s good to have a strategy.
Why you might want to buy a new home first
If you’re in a seller’s market, buying first gives you plenty of time to find a home and have your offer accepted. You can then rest easy—safe in the knowledge that when you put your current home on the market, it’s likely to sell quickly. With this strategy you can avoid the stress of needing interim housing while you spend weeks (or months) in multiple bidding wars waiting for a seller to finally accept your offer.
If you’re buying first in a buyer’s market, you may consider including a home sale contingency in your offer. A home sale contingency means you won’t be obligated to buy the new home if you can’t sell your current one. This strategy could give you peace of mind and is a great motivation to buy first.
While it may be tempting to include a home sale contingency with any offer, the epic housing shortage of 2020–2021 put an end to most sellers accepting offers with a home sale contingency. (In some areas sellers wouldn’t accept offers with any contingencies at all.) Different market conditions require different plans of attack; it can help to work with a real estate agent to determine the best strategy for you.
Pros to buying first
- You can take the time you need to find ‘the one’
- You only need to move once
- If you’re planning to remodel your current home (or your new one), you have a place to live during the renovation
Cons to buying first
- You may have to carry 2 mortgages (and possibly get a bridging loan to access your home equity)
- Including a home sale contingency in your offer may make the offer less appealing to sellers
- Financial pressure may force you to sell for less than you want
Why you might want to sell your current home first
If you’re in a seller’s market, selling first is your chance to cash in while buyers clamour to make their best offers on your home. When your home equity becomes cash in your pocket, you’ll be ready to make a down payment and have a much better idea of your new home buying budget. It’s good to keep in mind, however, that if you can’t buy a new home right away, you’ll need to find somewhere to live if friends or family can’t take you in. Unfortunately, this also means you’ll have to move twice. That said, if you’ve got a place for you and your stuff, selling first could be the way to go.
If you’re selling in a buyer’s market, selling first means you won’t need to juggle 2 mortgages while you wait for a buyer. Homes in buyer’s markets tend to stay on the market longer, so while you wait for someone to buy your home, you can take your sweet time checking out all the homes you’re interested in. Once a buyer makes an offer on your place, it’s time to pull the trigger on the home you want to buy. Fun fact: When you’re a buyer in a buyer’s market, you’ll have more power to negotiate contingencies and a closing date that works for you.
Again, your real estate agent will be the market expert you’ll need to help plan your home selling strategy.
Pros to selling first
- Frees up cash for your down payment and make it easier to qualify for a new mortgage
- Avoids 2 mortgage payments
- You can make an offer on the new home without a home sale contingency
Cons to selling first
- You may need to store your belongings and find interim housing while you look for your next home
- Moving twice will double your moving costs
- Your living situation may make you more pressured to buy
How to buy and sell a house at the same time
Whether you decide to buy first or sell first there are 3 key steps every homeowner should do.
First, decide which time of year to take the plunge
Traditionally, summer is a good time to buy a new home if you need to sell, but there are pros and cons to every season. While shows on HGTV make it seem easy to get a home renovated and ready to sell in a weekend, the truth is for most people it takes a lot longer. That’s why planning ahead is key to making buying and selling at the same time possible.
Next, prepare your current home for showings
You need your home to look its very best to give you the best chance of selling it for the price you want. Depending on the state of your home, this can take some time. You’ll want to consider the following to get you and your home ready for buyers:
- Declutter your home and make necessary repairs.
- If needed, paint your walls neutral colors. A ‘blank slate’ makes it easier for a buyer to see themselves in your home.
- Get your finances in order and your docs in a row. Consider saving for a bigger down payment or repaying debt to lower your debt-to-income ratio.
- Think about how you’ll stage your home. Too many things in a room make it feel smaller, no furniture at all also makes a room feel smaller.
Then, select a real estate agent to sell your current home and buy a new one
A good real estate agent will be responsible for finding buyers, listing the open house, and showing the home when you’re not around. If you’re buying and selling in the same area, you can use the same agent for both transactions. If you’re relocating, you may have to find a different agent for the area you plan to move to.
With an experienced real estate agent at your side, you’ll get a good understanding of the current real estate market and together you can plan your next move. When you work with a Better Real Estate Agent, you could save thousands on your listing fee.1
How Better Real Estate and Better Mortgage can save you money
Regardless of whether you buy first or sell first, having a real estate and mortgage company working in lockstep can help make the transition from your current home to the next easier. That’s why the Better family includes all the companies you need to get a home. Better is committed to making homeownership faster and simpler, and we’ve built technology to streamline the entire process from start to finish.
Save with Better Real Estate
Better Real Estate can connect you with a trusted real estate agent who’s an expert on the area in which you’re looking to buy. Unlike most real estate agents, agents from Better Real Estate aren’t working to pad their commission, they want you to make the right offer, not the biggest one. To put their money where their mouth is, when you buy a home with Better Real Estate and fund with Better Mortgage you'll save $2,000 on closing costs.2 Even if you’re in a state where we don’t yet have Better Real Estate Agents, we’ll match you with an agent from one of our nationally known partners, and you’ll still be able to save $2,000.2
Save with Better Mortgage
Better Mortgage doesn’t charge lender fees or loan officer commissions. Instead, they’ve built technology to streamline the entire mortgage process from start to finish. This makes it less expensive for them to make the loan so they can pass on the savings to you. Better Mortgage saves homebuyers $8,200 on average over the life of their loan.3 Better Mortgage also offers the Better Closing Guarantee—this means if you don’t close on schedule you’ll receive $2,000.4
Buying and selling a home with the Better Cash Offer program
To give you the freedom to buy on and sell on your schedule, Better Real Estate will buy the home you want so you can move in right away, while you finalize your mortgage and sell your home.7 This means you won’t need to include a home sale contingency to make an offer on the home you want. All-cash offers are 4x more likely to be accepted and even if your cash is tied up in your current home’s equity you’ll be able to buy the home you want first and you won’t need to worry about a place to live while you sell your current home.
If you’re buying in a competitive seller’s market, the Better Cash Offer program could give you the edge you need. If you’re selling your current home in a buyer’s market, with the Better Cash Offer you can buy the home you’re after and then have 180 days to find a buyer for your current home.
How the Better Cash Offer program works:
As we’re still a growing company, the Better Cash Offer program isn’t available everywhere, yet. But if you’re buying in one of the following markets, the Better Cash Offer program is an option you should explore. A Better Real Estate Agent can also explain how you can take advantage of this program.
- District of Columbia
- New Jersey
- North Carolina
- South Carolina
Connect with a Better Real Estate Agent to discuss your options
Talking with an experienced agent will help you decide which path to take and what steps to get there. Agents from Better Real Estate can answer all your questions, talk through your options, and work with you to help sell your home and buy a new one. A no-commitment pre-approval from Better Mortgage can give you an idea of how much new home you can buy in as little as 3 minutes.
While you may not be ready to buy or sell today, knowing the current situation of the market, your home, and your financial situation will give you the information you need to get the house you want.
1 AZ, CA, CO, FL, GA, IL, MD, MI, NY, NC, PA, SC, TX, VA, WA and DC see for the Better Real Estate Listing Fee Discount T&Cs
1 AL, NJ, OR, TN see for AL, NJ, OR, TN Better Real Estate Listing Services T&Cs.
3 The average lifetime savings estimate is based on a comparison of the Freddie Mac Primary Mortgage Market Survey’s (PMMS) 30-year fixed-rate mortgage product with Better Mortgage’s own offered rate for a comparable mortgage product between Jan ‘20 - Dec ‘20. PMMS is based on conventional, conforming fully-amortizing home purchase loans for borrowers with a loan-to-value of 80 percent and with excellent credit. Better Mortgage’s offered rate is based on pricing output for a 30-year fixed-rate mortgage product with a 30-day lock period for a single-family, owner-occupied residential property and a borrower with excellent (760 FICO) credit and a loan-to-value ratio of 80 percent. Individual savings could vary based on current market rates, property type, loan amount, loan-to-value, credit score, debt-to-income ratio and other variables.