How to Sell and Buy a House at the Same Time: The Ultimate Guide

If you’re a homeowner looking to buy your next home, then you’ll likely have to juggle selling and buying at the same time. In an ideal world, you’d close on both homes on the same day, but that’s rarely the case. Expect some time between selling your house and buying a new one –  or vice versa. 

In this Redfin article, we’ll outline the steps for selling and buying a house at the same time. Whether you’re looking at homes in Indianapolis, IN, or in Lubbock, TX, here’s how to sell and buy a home at the same time –  and what you can expect along the way. 

Start by understanding your local housing market

The first step when buying and selling a home at the same time is to decide what to do first – sell or buy. Start by evaluating the local housing market to see which option makes the most sense. If you’re moving to a new city, the housing market may be different, so you’ll need to time your home sale accordingly. Understanding whether you’re in a buyer’s or seller’s market is a great starting place. 

Is it a buyer’s market?

A buyer’s market means there are more homes for sale than buyers. As the buyer, you’ll likely have more options and negotiating power. However, it could take longer to sell your home than you’re anticipating. 

Options to consider:

• Home sale contingency: Allows you to back out of buying if your current home doesn’t sell. It’s useful if you’re relying on proceeds from the sale.
• Extended closing: Gives you more time to sell your home before finalizing the purchase.

Is it a seller’s market?

A seller’s market means there are more buyers than homes for sale. As the seller, you’ll likely have an easier time selling your home. However, you may find it difficult to buy a home in this market. 

Options to consider:

• Settlement contingency: Used when you’ve accepted an offer on your home but need the sale to close before purchasing a new one.
• Rent-back agreement: Allows you to temporarily rent your home from the new owner, giving you extra time to find your next home.

Sell or buy first – Which option is best for you?

The best approach depends on your financial situation, risk tolerance, and housing market conditions. Here’s what to consider:

Pros of selling your home first

• Less financial burden: You won’t pay for two mortgages at the same time.
• Access to home sale proceeds: You can use the proceeds from your home sale for your next down payment.
• No need to rush the sale: You won’t feel pressure to reduce your listing price to sell your home quickly.

Cons of selling your home first

• Temporary housing: Finding a temporary place to live before buying a new home may be stressful. 
• Moving twice: You’ll probably have to move two times, which can be costly.
• Tight timeline to buy: You may feel pressure to find a new home quickly.

Pros of buying a home first

• More time to find the right place: Finding the right home may not be as stressful or rushed, especially if you have specific needs. 
• You only move once: There are no expensive storage fees or double moving expenses.
• You have your old home: If something goes wrong during the homebuying process, you can stay in your current house. 

Cons of buying a home first

• Paying for two mortgages: You may end up paying for two homes until you sell your first house, which can be costly.
• You may not qualify for a new mortgage: If you still have your existing mortgage, a lender may not approve your next one. 
• Fewer funds for down payment: If most of your money is tied up in your current home, you may not be able to make a larger down payment or buy a more expensive home. 
• Pressure to accept an offer: You may feel pressured to accept a lower offer on your house if you’re rushing to sell.
• Challenges of renting your old home: If you decide to rent out your current home until it sells, you may face challenges that come with being a landlord.

If you’re still unsure, consult a real estate agent who understands your local market and can guide you based on current conditions.

Selling your home before buying: Tips to help

Consider a rent-back agreement

A rent-back agreement is a temporary lease where you rent back your old home from the new owners once the sale is completed. This allows you more time to buy your next home or complete the sale if you’re already in the process of buying. Rent-back agreements can also be a good option, so you don’t have to move twice.

Request an extended closing date

You can ask for an extended closing date when selling your home. This gives you additional time to find your next home and ensure there’s little to no overlap when the sales close and you need to move. 

Plan for temporary housing ahead of time

Whether you want to negotiate a rent-back agreement, find a short-term rental, or live with family or friends, it’s best to decide where you’re going to live before listing your home for sale. 

Understand your budget for buying

If you’re planning to use the proceeds from your home sale to finance your next home, it’s important to come up with a budget in advance. You may have a number you’d like to sell your home for, but that may not be the reality. Determine a range for your budget in advance and price your home accordingly. 

Buying a home before selling: Tips to help 

Determine your financing options

Before you buy your next home, it’s important to determine how you’re going to finance the purchase. There are a few ways to finance your next home purchase if you can’t use the proceeds from your home sale. Some common financing options include using your savings, a home equity line of credit (HELOC), and a bridge loan.

Use your savings

It’s possible you have enough savings to cover a down payment, which can make it easier to buy a new home before selling. Keep in mind that you’ll also need enough funds for closing costs, additional fees, and moving expenses. 

Use a home equity line of credit (HELOC)

For many homeowners, savings are tied up in their current home as “equity.” A home equity line of credit (HELOC) allows you to access your home equity in order to finance your next home purchase. If you qualify, this can be a good option to consider. 

Use a bridge loan

A bridge loan is a short-term loan that allows you to cover the cost of a down payment until the home closes. Some banks offer this loan, but not all, and it can be difficult to qualify. 

Consider a home sale contingency

Including a home sale contingency in your offer allows you to back out of the home sale if your current home doesn’t sell. In other words, buying a new home is contingent on the sale of your old home. 

Request an extended closing 

An extended closing gives you extra time, if you’re close to selling your old home. It can give you enough time to coordinate the sale of your home while purchasing a new one.

Rent out your old home

If you’re not close to selling your home, consider renting it out. Depending on the market conditions, this can be a good idea to help offset the costs of owning two homes. 

FAQs about buying and selling at the same time 

Should I buy or sell first?

It’s up to you and your circumstances whether you sell your current home or buy a new one first. There are pros and cons to both ways, but understanding your finances, determining a timeline, and working with a skilled real estate agent can help make the process that much easier. 

What happens if I sell my home but can’t find a new one in time?

If you sell first but don’t have a new home lined up, you can consider a rent-back agreement, short-term rental, or staying with family or friends while you continue your home search.

How do I time selling and buying to avoid paying two mortgages?

To minimize overlap, you can:

• Negotiate a contingency in your purchase agreement that depends on selling your current home.
• Request an extended closing period for your new home.
• Use a bridge loan if temporary dual payments are necessary.

What if my home doesn’t sell as quickly as I expect?

If your home takes longer to sell:

• Consider lowering your asking price.
• Improve staging and marketing with your real estate agent.
• Look into renting out your home temporarily to offset costs.

Can I use my 401(k) to buy my next home?

You can withdraw or take a loan from your 401(k) to buy your next home. However, there are various penalties and strict repayment schedules associated with using your 401(k) funds. It’s best to talk with a financial advisor first. 

Should I use the same real estate agent for selling and buying?

Using the same agent can simplify coordination and negotiations, but if you’re moving to a different city, a local expert in your new area may be more beneficial.

How do I make an offer on a new home without the proceeds from selling my current one?

You can include a home sale contingency, negotiate a longer closing period, or use a HELOC or bridge loan to finance the purchase temporarily.

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