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Should you buy or sell first when moving?

(NC) You’re close to retiring, but you’re in a home that’s too big and too expensive. So, you decide to find a new home that better suits your needs. But, do you buy that new home first or sell your old home before you buy? It’s important to think carefully about your needs and tolerance for financial risk before you commit either way.

The pros and cons of buying first

If finding the perfect home is your priority, buying first means you can spend as much time as you need in your search. You won’t have the pressure of an impending closing deadline, which could force you to buy a less-than-ideal home, or to move into a temporary home while you search.

However, if you buy first you’ll have to find the money for a deposit and down payment, which could be difficult if all of your equity is tied up in your current home. That’s one reason land-lease homeownership is growing in popularity with retirees: it can require less money up front, since you are only purchasing the home and not the land it’s on.

A potential downside of buying first is that you may need bridge financing and could find yourself owning two homes at once until you are able to sell your current home. This may mean paying for insurance, property taxes and utilities for both homes at the same time. These financial pressures may force you to take a lower offer on your original home than you would have if you’d sold it first.

If you’re particular about the location or the type of housing you wish to purchase, buying first may be the way to go.

The pros and cons of selling first

Selling your home first can give you better control of your sale price and alleviate pressure to accept the first offer that comes your way. Then, after you've sold your home, you’ll have a better idea of what you can afford to buy.

However, as soon as you accept the buyer’s offer, the clock starts ticking towards the closing date. Since you’ll need to find a new home soon, that puts pressure on you to find your perfect home on a deadline.

You might feel you have to make an offer on a home that doesn’t exactly fit your lifestyle, or look at a temporary rental, which would mean moving your furniture and personal belongings twice.

Regardless of what you decide, make sure you have a backup plan. Access to financing and temporary accommodations will take some pressure off should problems arise during the buying and selling process.


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