Buying and selling a home at the same time: A complete guide

When you’re ready to move, should you buy your new house or sell your current house first? Or should you do it the other way around?

Selling and buying a home at the same time may seem like a difficult scenario, but careful planning, the right financing tools, and expert support can help you get comfortable with multiple options.

Read on for more information about the pros and cons of each approach, financing options, and expert-backed strategies so you can map out your personalized plan.

Should you sell your house before buying or buy before selling?

Selling a house before buying or buying before selling is a strategic decision. The right answer depends on several factors, including your personal finances, local market conditions, and risk tolerance.

Buying before selling

Buying a new house before selling the old one means you can move into a new home before you sell. You won’t have to stress about temporary housing. However, you might end up with dual mortgage payments and potential financing hurdles with your lender. Let’s more fully unpack the pros and cons so you can decide whether this approach will work for you.

Pros

Buying before selling could help with the following:

• No moving pressure: You won’t be under pressure to move quickly if you buy before selling. You’ll already be living in the house you want to own. Therefore, you can wait for the right buyer to purchase your home, hopefully making more money off the sale in the process.
• More time to shop: You’ll likely have more time to look around for the right home. That’s a better scenario than rushing to purchase a home right away because you need somewhere to live.
• Can avoid temporary housing: Buying before selling your current home ensures you won’t have to look for an apartment or move in with family members or friends.

Cons

The downsides of buying before selling could include:

• May need a bridge loan or HELOC: You might need to financially bridge the gap between your existing and future homes, meaning you might need to finance with a HELOC (home equity line of credit) or bridge loan for home purchases. (More on those below.)
• Risk of carrying two mortgages: Juggling two homes (one you’re currently living in and the one you’ve just bought) could mean you end up with two mortgages. It’s a good idea to ensure you can balance the finances before you go this route.
• More difficult to qualify: You might find it harder to qualify for a new mortgage if you’re trying to balance your existing mortgage while applying for another loan. Lenders will consider the risk you pose as part of your application.

Selling before buying

If you’re selling a house that has a mortgage, some people advise to sell first to avoid having two mortgage payments. Selling first may give you more financial flexibility and negotiating power, but it can also lead to timing gaps or temporary housing. As with buying before selling, you may face both pros and cons:

Pros

• You’ll be budget savvy: You’ll know your exact budget for the next home. Your lender will let you know how much you can qualify for based on your existing situation and financial picture, rather than your financial picture with two mortgages, which could look different.
• No risk of paying two mortgages: Selling before buying won’t put you in a tight spot financially because you’ll have already sold your old house and can put all your effort into finding your next home.
• Stronger negotiating position as a buyer: You may have more cash at your disposal to negotiate with a seller, such as the ability to make a more substantial offer.

Cons

• Paying rent: You might need to rent between homes. It might not be advantageous to move elsewhere, or you might need to put your belongings in storage.
• Pressure to find a new home: Selling before buying may make you feel as if you need to make a quick decision about where to move, and you may not want to make a hasty decision about where to live.
• Risk of missing out in a fast-moving market: If you’re trying to sell your house in a buyer’s market, a great home may come up for sale and then it’s gone. It might make you feel a bit frustrated to have to sell your house while feeling like you should be buying.

How to manage both transactions at once: A step-by-step guide

Learn some great tips on how to buy a house while selling below.

Step 1: Get preapproved for a mortgage

Getting a preapproval is a key first step before making an offer on a new home, and you can get preapproved with a few mortgage lenders to compare interest rates and other fees. A mortgage preapproval letter offers an estimate of what your loan terms might be, so getting a preapproval can give you a clear sense of how much you can spend on a home and also signals to sellers that you’re serious about purchasing.

Step 2: Find an experienced real estate agent

Working with a seasoned agent who has experience managing simultaneous transactions can offer incredible help when you’re buying and selling at the same time. Instead of working with two separate agents, consider getting one agent to coordinate both buying and selling. It can streamline communication and reduce risk. The agent can help with pricing strategy, negotiation, contingencies, and timeline coordination.

You can also set up an initial meeting and ask the following questions:

• Can you give me contact information for clients you’ve worked with in the past?
• What services do you offer?
• How long have you been in business?
• How many transactions have you completed in the last year?
• How do you juggle both buying and selling at the same time?
• What strategy do you have in mind for my situation?

Step 3: Research the buyer’s and seller’s market

Are you in a buyer’s or seller’s market and how can you tell?

You’re in a buyer’s market when there are more homes for sale than there are people searching for homes. You’re in a seller’s market when there are fewer homes available than there are people searching for homes. You can tell which market you’re in based on the following signs:

• Low home inventory levels (seller’s market)
• High home inventory levels (buyer’s market)
• Homes on the market for lengthy amounts of time (buyer’s market)
• Homes selling within days (seller’s market)
• Homes selling way above asking price, possibly creating bidding wars (seller’s market)
• Homes selling at or below asking price (buyer’s market)

Market conditions can affect whether you should buy or sell first, your pricing strategy, and how you use negotiation leverage.

Step 4: Prepare your home for sale

Next, get your current home market-ready to avoid delays once you list the home. You can hire professionals to ensure these tasks are done well. Consider opting for professional photos and staging the home for online listings. Your real estate agent can also time the listing based on seasonal trends and market data.

When preparing your home for sale, consider doing these things to make your house appealing to buyers:

1. Declutter and depersonalize: Remove anything that makes your home look cramped. Consider renting a storage unit. Remove personal items like photos.
2. Deep clean: Make your home as clean as possible, especially if you have pets.
3. Make repairs: Prioritize minor repairs you’ve been putting off, so buyers see your home is maintained.
4. Emphasize curb appeal: Make sure your lawn is maintained, give your front door a fresh coat of paint, and update numbers on the curb and mailbox.
5. Stage your home: Rearrange furniture so your home appears spacious, showcase the home’s best features, and paint walls in neutral colors.

Step 5: Decide whether to buy or sell first

This important choice depends on several factors, including your personal finances and your risk tolerance. To make the ultimate decision, consider whether you can afford two mortgages or if you need the funds from the sale of your house for the purchase of the new house right away.

• Buying before selling: Buying before selling could help alleviate the pressure of moving quickly, allow you more time to shop, and help you avoid having to move into temporary housing. On the other hand, you may have to get a bridge loan or HELOC, which could involve closing costs and require you to pay a loan off quickly. You may also end up carrying two mortgages if you’re still living in your original home when you buy a new one.
• Selling before buying: Selling before buying means you’ll know your budget for the next home. You won’t have to stretch your budget to make two mortgage payments. In addition, you’ll have a stronger negotiating position as a buyer because your money may not be tied up in an additional loan. However, you may have to rent between homes or may face pressure to find a home.

Step 6: Explore your financing options

Talk to your lender about all of your financing options and learn more about how to get a mortgage. Remember, you can still purchase a home even if your current home isn’t yet sold, so all is not lost if the perfect home comes up for sale and you haven’t sold your current home. Ask your lender about tapping into a HELOC, bridge loan, or rent-back agreement. Don’t forget that you’ll need to evaluate your finances which means doing things like keeping your debt-to-income ratio in line with your lender’s threshold and working with a lender to get preapproved.

Step 7: Coordinate closings or use contingencies

Your real estate agent can help you navigate closing, particularly if you want to coordinate two at once. To purchase a home, you’ll need to bring a few things to the closing table: your Closing Disclosure, a valid photo ID, your down payment, and a check for closing costs.

You can also use your contingencies to your advantage, whether you withdraw from the contract because you can’t find either the right buyer or withdraw because you can’t find a home you want to purchase in the right amount of time.

Step 8: Create a backup plan for temporary housing

Deals don’t always close perfectly in sync, so having a short-term plan can reduce stress. You don’t always have to go out and get a six-month lease on an apartment. You can consider short-term rentals, an Airbnb, staying with family/friends, or negotiating a rent-back agreement with the buyer.

Consider giving yourself the gift of some breathing room and building flexibility into the timeline. Don’t forget to reserve a storage plan for belongings (if necessary) in case you’re looking at a gap between moving out and moving in.

Tips to make the process smoother

The name of the game is minimizing risk, stress, and financial burden, so some of the best practices for buying and selling a house at the same time include:

• Working with one agent for both transactions if possible.
• Negotiating flexible closing dates.
• Getting preapproved early.
• Staying organized with timelines.
• Being ready with a moving backup plan, if needed.

Contingencies: A powerful tool for simultaneous buying and selling

Simultaneous closing means aligning closing dates on both homes, which you can do with careful planning. A contingency can help avoid having to carry two mortgage payments at once. A skilled agent and lender can help coordinate contract timelines. You can also use these contingencies to give yourself extra protection:

• Home sale contingency: This clause in a real estate contract makes the buyer’s offer contingent on the sale of their current home, so the buyer is protected from having to carry two mortgages at once.
• Home purchase contingency: Also called a suitable property contingency, a home purchase contingency allows you to cancel a contract without penalty if you can’t find another home to purchase.

Other financing strategies when buying and selling at the same time

Wondering how you can bridge the financial gap when buying and selling at the same time? You may want to consider bridge loans, home equity lines of credit, and sale-leaseback or rent-back agreements to move forward.

Bridge loan

A bridge loan is a short-term loan for homebuyers designed for transitioning to a home purchase before selling your current home. You’ll probably pay off the loan when you sell your existing home, so the bridge loan’s intent is to be repaid within 6 to 12 months. Note that some lenders require interest-only payments during the loan term.

Bridge loans can be a great bridge between selling and buying (so you don’t have to move twice), but bridge loans usually carry higher interest rates, and those short repayment windows might squeeze your budget.

Home equity line of credit (HELOC)

You could tap into your existing equity before selling your home. A HELOC borrows against your equity. A HELOC is a line of credit you can withdraw multiple times from a maximum amount available to you.

When you make payments on your HELOC, you replenish your available credit. HELOCs are flexible but usually have variable interest rates (the rates can go up or down, depending on market conditions). They also require you to pay closing costs, which range between 2% and 5% of your total loan amount.

HELOCs are great options if you have existing equity to tap into, but note that you can usually withdraw between 80% and 85% of your home’s appraised value, minus your mortgage balance.

Rocket Mortgage^® does not currently offer HELOCs.

Sale-leaseback or rent-back agreements

As a seller, you might be able to temporarily remain in your sold home while you look for your next home.

A rent-back agreement allows you to stay in your old home as a tenant after selling to the buyer. For example, let’s say Cory sells his house to Pam. After the sale finalizes, Pam may negotiate a rent-back agreement with Cory to allow her to pay Cory rent while she remains in the house for a specified period.

A leaseback agreement is similar, except it usually involves commercial real estate. The property owner sells their property to a buyer and signs a lease agreement to rent from the new owner.

FAQ

What if my house doesn’t sell as planned?

If your house doesn’t sell as planned, don’t panic. It’s important to realize that lenders and real estate agents have heard it all and that there are many purchase options available to you. Your home sale contingency can work in your favor, but you can also lower the listing price, rent out the home for a short period, or discuss extended financing with a lender.

Can you close on a house before selling your current one?

Yes, it’s possible to close on a new home before selling the current one, but it typically requires solid financial planning. Many people hope their home will sell to fund the down payment, but if it doesn’t work out that way, a bridge loan, HELOC, or other savings can fund the down payment. This strategy paves the way for a smoother move but comes with the risk of carrying two mortgages.

How does a home sale contingency work in a competitive market?

A home sale contingency allows a buyer to back out if their current home doesn’t sell. However, sellers may view it as a risk in a competitive market. In hot markets with bidding wars, contingent offers may be passed over in favor of non-contingent offers. You can combat the need for a contingency by offering a larger earnest money deposit or flexible closing terms.

What happens if your home sells, but you haven’t found a new one yet?

You should celebrate this exciting event even if you haven’t yet found a new place to live. This type of situation happens all the time, so breathe. You can opt for a short-term rental, live with family or friends temporarily, or negotiate a rent-back agreement. Consider all angles and options before you list your home and talk to your agent about timing and buyer flexibility.

Do I need the same real estate agent to buy and sell a home?

Using one agent for both can streamline communication, improve timeline coordination, and potentially offer cost savings, though dual agency (when one agent represents both buyer and seller in the same transaction) may be restricted in some states. If a buyer and seller are in different markets, using two local agents who communicate well is often the best approach. Consider interviewing agents thoroughly about their dual transaction experience.

The bottom line: Simultaneous buying and selling is possible with a solid plan

Buying and selling at the same time is common. It can be done. Arm yourself with the right tools, like research on the state of the real estate market in your area. Don’t forget to consult a seasoned real estate professional in your area. Also, reach out to lenders in case they’re part of your plan. You’ll make considerable headway in planning, understanding the market, and considering all the financial angles this way.

Ready to get preapproved for a mortgage? Learn your options and kick off the Rocket Mortgage^® preapproval process.