The Chicken or the Egg Dilemma: Buying or Selling First?
Somewhere through the pathway of our lives, we might decide to buy a new house and, hopefully, for good reasons. The very moment we think about buying a new house is the moment we ask ourselves, “Should I sell my house or buy one first?”
Here’s how it usually takes place:
“If I want to buy a house, I need money for that, so I should sell my home first. But, if I sell my home first, chances are I can’t buy a house equally as good”.
The question has been with us for ages and yet somehow not approached as it should. The reason behind this conundrum is that every solution we provide brings to mind an even bigger problem with itself as if this question has been invented by some wise, wicked man only not to be answered ever.
Let’s see what makes this question so difficult by taking a look at the pros and cons of each scenario.
Table of Contents
Pros and Cons of Selling the Home First
Pros of selling the home first
- When you first sell your present house, you know exactly how much money you have and, therefore, you’ll be able to select houses that fit your budget.
- Having your money ready in your pocket, you will have more negotiating power in cases where there are several candidates for the home you want to buy.
- Selling your house before buying another one means that you don’t have to deal with two mortgages which can be a true nightmare for some.
Cons of selling the home first
- If you sell your home first, you may fail to buy a house for a month or two. Therefore you have to rent a temporary house which is not the ideal case for many.
- Selling your home first entails that you should probably move twice. Once to your temporary house, and then again to the one you buy.
- You may end up buying a house you don’t exactly love or overpaying for one because you can’t continue without a home any longer.
Pros and Cons of Buying a Home First
Pros of buying a home first
- You can move to your new home without any pressure and on your own schedule, as no one is forcing you to vacate your first house.
- You can look for your ideal house as long as you wish. There’ll be no rush for you.
- You have the option of keeping your house until the market is more welcoming. This way, you can sell at a higher price.
Cons of buying a home first
- If your first home doesn’t sell, you’ll have to pay two mortgages for a few months.
- You may face financial problems and fail to pay some of your dues.
- Under financial hardship, chances are that you will sell your first house for a lower price.
To Buy First or to Sell First: That Is the Question!
As you can see, each path has its own advantages and disadvantages. So, how are you to decide whether to sell or buy first?
Well, the tips below can help you a great deal. Just remember that, under certain circumstances, they may override one another. In such situations, every individual must make their own decisions considering their own unique situation.
Understand your finances
When deciding to sell or buy, you should evaluate your financial situation first. You might think to yourself that you can even out your expenses by simply buying a new house at the same price you’ve sold your previous one. But who can guarantee that? You must have some extra money for unforeseen expenses such as extra commission fees, insurance, utility bills, etc.
Additionally, you should make sure that you can pay two mortgages for a few months. So, if you think that you may undergo financial hardship, if you first buy, then you may not risk buying a new home first, unless for a very good reason.
Assess the market condition
Before even bothering yourself with the question, “Should I sell or buy a home first”? You must assess the market condition and see if it’s more suitable for buying or selling.
So, take your time to learn about housing market indicators and strike only when the “market” is hot.
But remember, the housing market can’t be suitable for both buying and selling at the same time. More often than not, this will not be the case. If you conclude that the market is more suitable for buying, you should sell your house first.
Why? Because when there are more buyers, competition is tense, and consequently, your house will probably sell for a higher price. For the same reason, if you decide the market is good for selling, you should buy.
Constantly look for your ideal house
What are some of the factors that we take into account when looking for a new house?
- Distance from work, school, public transportation,
- affordability, and
- a good neighborhood
You may also have other things, such as a small garden or a patio, in mind. Whatever your criteria are, keep looking for houses that have those features. As soon as you find one that meets all your expectations, even if the market is not at its best, you should seriously consider buying that house.
I understand you may have difficulty selling your house and face financial issues for a while. But remember that this new house is not an ever-present option. You may not find an ideal one in months. So, it’s definitely worth fighting for.
Prepare your home for the market
Even if you don’t want to sell your home first, you should prepare it for sale early. You may need a month to renovate some parts, repair the piping system, or fix the roof.
Also, keep in mind that it may take months before the right buyer stops by and talks money.
If buyers come sooner than expected with good offers, you can sell the place or wait for a few more weeks or months (till you find your ideal house). If no one shows any interest in your house, it’s totally fine. At least, you know that you can’t count too much on it and that you should probably reconsider your house’s selling price or upgrade it to add to its appeal.
What’s the Verdict?
As you see, we can never provide a solid answer to this question that could apply to all situations simultaneously. Since every individual has a unique situation that determines how they should resolve a dilemma this complicated, they should each make decisions accordingly.
Also, our personality traits play a defining role in this. If you’re a risk-taker, for example, you can buy a house first because you’re no stranger to stress and pressure, and you’ll figure out how to deal with financial issues. If, on the other hand, you’re a super-cautious person, you’d better stay on the safe side of the fence and sell your house first and get rid of one mortgage.
Unless your house is not in a really bad condition, you can go with simple but effective changes. Here are some:
- Wash the roof, the yard, and the floors
- Update the light fixtures
- Clean the windows and paint the window frames ( if necessary)
- Scrub the tiles and dust the walls
- Plant flowers in your yard( if you have one)
- Add historical and artistic items
- Freshen up the entry
Depends on how badly you need the money. If you want to sell it just to pay less taxes, you can borrow from friends and family and move on like this for a while. If you must sell it to pay for the new house, then you should put a lower price on it so that it sells.
You could also get a bridge loan or which perfectly suits your situation.