Compare Buying First vs. Selling

Whether you decide to buy or sell first, review your options before making a decision.

Buying First

1. Make an Offer, Then List

Put in an offer on a new home with a sale and settlement contingency, then list your home for sale.

2. Get a New Loan

Purchase your new home using a HELOC or bridge loan.

3. Rent Your House

Rent out your current home in order to afford your new one.

Selling First

1. List, Then Make an Offer

List your home for sale, then make an offer on a new home with a settlement contingency.

2. Request a Rent-Back

Sign a rent-back agreement with the new owners of your home to live there until you find a new one.

3. Find a Temporary Rental

Find a temporary rental to live in after you sell.

Options to Buy Your New Home First

Buying and selling a home all at once can be stressful. If you sell first, you could end up with no place to live until you find your perfect home. If you buy first, you might get stuck having to pay two mortgages at once. Review your options and contact a Redfin Agent if you need help.

1. Make an offer on a home with a sale and settlement contingency, then list your current home for sale.

This is an option if you’re worried about selling your home too quickly and not being able to find another one to buy. Find your dream home first, and then make an offer with a “sale and settlement contingency.” This means that your offer is contingent upon your current home selling. Warning: in a competitive market this option is not advised; talk to a Redfin Agent to learn more.

2. Use personal savings, a HELOC or bridge loan.

Most people can’t afford to pay for two mortgages at the same time, or buy a home with cash. If you don’t have that kind of savings, you can use a HELOC or bridge loan to cover the costs of purchasing a house while you’re still paying the mortgage on your old one.

What is a HELOC? A home equity line of credit (often called HELOC and pronounced Hee-lock) is a loan in which the lender agrees to lend a maximum amount within an agreed period (called a term), where the collateral is the borrower’s equity in his/her house (akin to a second mortgage).

What is a bridge loan? A bridge loan, sometimes called gap financing, is a short term loan lent by a bank to cover the interval between buying a new house and selling your old one. Note that bridge loans can be difficult to find, as not many banks offer them.

3. Rent out your current home to cover your new mortgage.

If you can find renters who are willing to pay more than what you owe on monthly mortgage payments and what it costs to maintain your home, it makes financial sense to rent out your current house and purchase a new one. The downside is that you’ll need to have a down payment saved, and being a landlord comes with a lot of responsibility.

Pros & Cons of Buying First

Pros

You’ll have a place to live, which means you won’t make hasty decisions and end up buying a home you don’t like.

Cons

You may feel rushed to sell your home, and making an offer with a contingency can make it less competitive.

Options to Sell Your Current Home First

1. Put in an offer on a new home with a settlement contingency.

As soon as you put your home on the market, start looking at places to buy, but don’t make an offer on any of them until you’ve accepted an offer on your current home. If you’re in this situation, it’s important to know exactly what you’re looking to buy so you can make an offer as soon as you find it. When you make the offer on your new home, you can include what’s called a “settlement contingency.” This means that your offer is contingent on your current home selling by a specified date. If it doesn’t sell by that date, you can pull out of the deal. Note that this may make your offer less competitive.

2. Sign a rent-back agreement with the owners of your new home.

A rent-back agreement is when the buyer allows the seller to stay in the home for an agreed-upon period of time, in exchange for rental payments. If you negotiate for this when you sell your house, you can stay in your home while you search for a new one; you just have to pay rent to the person who bought your house. Warning: this may reduce the number of offers on your home.

3. Find a temporary rental to live in while you search for a home.

If you can’t get a HELOC or Bridge loan and need the money from the sale of your home to buy a new one, this is a good option for you. You can sell your home and move into a rental while you search for your dream home. This is a hassle, but enables you to make an offer on a home without a sale and settlement contingency.

Pros & Cons of Selling First

Pros

You’ll have the cash to buy a new home, and won’t feel rushed.

Cons

Every option has a downside; talk to an agent to figure out what’s best for your situation.