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Buy or Sell First

If you have recently moved or contemplated a move, one question that probably came to mind was:
Should I sell my home before I purchase my next home or vice versa? 
As real estate professionals, this is a common question, but one that is difficult to answer because it depends on your unique situation. Much like the question of which came first, the chicken or the egg, there is no right or wrong answer. There are advantages and disadvantages to both.

To help determine your best strategy, we recommend first evaluating factors such as the following:

  • What is my motivation for moving?
  • What is my time frame? 
  • Do I need proceeds from the sale of my home to purchase a home? 
  • What is my current home worth? 
  • What are the market conditions for selling my home? 
  • Where do I intend to move? 
  • What are the market conditions in the area where I intend to purchase? 
  • Do I have a place to live if I sell my home before finding a home to purchase?

Before delving into the primary question (buy or sell first), it is essential to understand the current real estate market in the Twin Cities. The Twin Cities residential real estate market is hot for homes in particular areas and price ranges. There is a drastic shortage of choices for homes in the more moderate price ranges and closer to the core cities of Minneapolis and St. Paul. However, you should consult a Realtor® to get an idea of the conditions in the specific areas in which you are interested. Because of high buyer demand and low listing supply, it is generally believed that it is easier and quicker to sell a home than it is to find a home.  

In our opinion, the safe play is to sell your home prior to purchasing. By doing so, you avoid the dreaded situation of maintaining and making payments on two properties. However, there are drawbacks. The most obvious one is that you no longer have a place to live. If you sell your home but are unable to purchase a home before the sale is closed, it is important to have a solid “plan B” for a temporary place to live. Moving in with parents or friends is an option for some, while leasing a short-term rental may be more appealing to others. Such temporary living arrangements may be worth it if the end goal of finding the home you desire is worth a short-term inconvenience of temporary living. (Click here to see our tips on preparing your home for sale. Click here for storage facility options in the Twin Cities.)

There are circumstances when purchasing a home before selling is in your best interest. For example, if the home you have been waiting years to purchase suddenly becomes available, but you have not yet prepared or listed your current home for sale. This scenario is especially relevant in a “hot” real estate market where you must act quickly and decisively when a home comes on the market that fits what you desire. However, when moving into a new abode, most people want to focus on making that new house a home. This can be difficult if you are still trying to sell your previous home.

Because vacant homes are less attractive to buyers, we advise sellers to keep the home that is listed as furnished as possible to provide the best staging options. This means much of the furnishings should not be moved until the current home is sold, delaying a full move into your new home. In addition to the expense of owning two properties, you must consider the hassle of lawn care, snow removal, security, and general maintenance of two properties. While the buy first option has more cons than pros, the current market conditions make this strategy more common.

There are creative ways to minimize the pain or inability to finance a purchase without selling your home first. The two most common options are making your offer contingent upon the sale of your current home or bridge financing. In most circumstances, and particularly in the current market, sellers are not eager to accept an offer contingent upon the sale of the buyer’s home. Bridge financing is a financial tool that enables buyers to make a non-contingent offer without selling their home. The interest rate for these loans is generally higher, and this is a short-term solution. Contact a mortgage broker for more information on bridge financing. 

As you can see, there are pros and cons to buying first, and there are pros and cons to selling first. To discern what option is best for you, we encourage you to reach out. We can help you weigh the pros and cons of each side and answer all of your questions regarding today’s market conditions.

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