Reviewed by: Brandon Brown

The idea of putting an offer on a new home before selling your current one can be tempting. After all, who wouldn’t want the security of locking in their dream home without the fear of it slipping through their fingers? But before jumping in, it’s important to weigh the pros and cons of this strategy.

For many homeowners, balancing the timing of both selling and buying can be a nerve-wracking experience. Whether you’re looking to move into a bigger house, downsize, or relocate to a different neighborhood, the decision to put in an offer before selling your current home is an important one. Let’s explore the benefits and challenges of this approach so that you can make the most informed and best decision possible.

Benefits of Putting an Offer on a New House First

One of the most convincing reasons to put an offer on a house before selling yours is the peace of mind that comes from knowing that your new home is secured. Imagine finding your dream home — the perfect layout, a great location, and all the amenities you’ve been dreaming of! Waiting to sell your old home before making an offer could mean missing out on this ideal property, especially in today’s competitive real estate market. Let’s explore these benefits in detail:

• Securing Your Dream Home – If you’ve found a property that ticks all your boxes, putting in a successful offer guarantees that no one else can swoop in and buy it under your nose. In a seller’s market, this is particularly important. Homes often go quickly, and waiting until your current home is sold may leave you in the dust!
• Avoiding the Stress of Temporary Housing – Another major advantage of buying first is avoiding the hassle of moving into temporary housing. Moving twice — once into a rental or relative’s home and then again into your new property — can be costly and draining, both emotionally and physically. By buying first, you can move directly from your current home to your new one, saving time, money, and energy.
• Capitalizing on Favorable Market Conditions – Sometimes, market conditions make it the perfect time to buy a new house. Whether it’s lower interest rates, more available homes, or an increase in competitive buyers, making an offer at the right time could result in a great deal. If the stars align with your budget and desired new home, it might be the perfect moment to act on it!

Financial Implications

While the benefits are tempting, jumping the gun and putting an offer on the house before selling yours may have some serious financial considerations. Managing two homes at once can be a tricky feat, after all. Here are some things to consider:

Qualifying for Two Mortgages

One of the biggest hurdles is qualifying for two mortgages. You’ll need to prove to your mortgage lender that you can afford to make payments on both your current house and your new home. Even if you plan to sell quickly, this isn’t always a guarantee. So be prepared for the possibility of covering two sets of mortgage payments for a while if you decide to buy a new house!

Cash Flow and Mortgage Payments

In addition to your mortgage payment, remember that owning two properties also means double the expenses. Utilities, property taxes, maintenance, and homeowner’s insurance will add up quickly. Before making a decision, assess your cash flow carefully before you make an offer on a new house so that you can manage these costs until your current home is sold.

Home Sale Contingency

Some buyers may protect themselves by including a home sale contingency in their purchase agreement. This contingency states that your offer is only valid if your current home sells within a specified timeframe. While this can provide you some protection, it may make your offer less attractive to sellers — especially if they have other prospective buyers lined up without contingencies.

Risk of Owning Two Properties

Owning two properties at the same time sounds daunting for a reason. While securing your dream home might be your ultimate goal, carrying two mortgages at once has its share of risks, including:

• Financial Strain – Managing two homes can put a strain on your finances, especially if your current home doesn’t sell as quickly as expected. The longer it stays on the market, the more you’ll need to cover both mortgage payments. If you’re relying on selling your existing home to free up money or equity for your new purchase, this could leave you in a financially risky situation.
• Double the Maintenance Costs – With two homes, you’re also responsible for double the maintenance. That means yard work, repairs, and general maintenance for both properties. If you’re already living in the new house, you’ll also need to ensure that your old house stays in good condition for showings and potential buyers, which may add stress and financial burdens.

Market Conditions and Timing

The real estate market also plays a significant role in helping you assess whether putting an offer on a new home before selling your current one is a smart move. Here are the details:

Seller’s Market vs. Buyer’s Market

How long does it take to sell a house? Well, this may largely depend on the current market conditions. These can differ by location, meaning some areas may be in a seller’s market while others are in a buyer’s market at the same time. Several factors can contribute to these differences, including local supply and demand, economic conditions, population trends, and even seasonal changes.

In a seller’s market, homes sell quickly, often with multiple offers. In this condition, it might make sense for you to secure a new home first because your current home is likely to sell quickly once it hits the market.

On the other hand, in a buyer’s market, homes may take longer to sell, which could leave you juggling two mortgages for an extended period. Timing is crucial, and understanding the local market can help you determine whether now is the right time to make this move.

Tip: To ensure that you’re making a good decision, pay attention to real estate platforms, see how quickly homes are selling, the number of listings, and whether prices are rising or falling.

Importance of Timing

Beyond the current real estate conditions, you should also consider your personal timeline. Is moving urgent? Are there any upcoming financial changes, such as a job relocation, that may impact your decision? Timing is everything in real estate, and it’s important to consider how the market and your personal situation will influence your success.

Bridging Loans and Financial Solutions

If managing two homes sounds overwhelming, don’t worry—there are financial solutions available. One popular option is getting a bridging loan.

What is a Bridging Loan?

A bridging loan is a temporary or short-term loan that helps you buy a new home before you’ve sold your old one. This gives you money based on the value of your current home, so you can use it to pay for your new house.

Once your old home sells, you can use the money from that sale to pay off the bridging loan. It’s a useful option if you need extra money during the process of moving from one house to another without having to wait for the sale of your current home.

However, this type of loan may have higher interest and relatively short terms than traditional ones. And, if you’re waiting to sell your home while still having a mortgage, you’ll have to make payments for both loans.

Other Financial Options

You could also explore home equity loans, home equity lines of credit (HELOCs), or even personal loans to help you fund the gap between buying and selling. Each of these options comes with its pros and cons, so make sure to consult with a financial advisor or a mortgage lender to see which solution fits your situation best!

If you’re wondering, “Can I sell my house while in Chapter 7 bankruptcy?” the answer is yes, but you’ll need court approval to proceed with the sale. It also depends on getting the trustee’s approval to proceed with the sale. To handle this, consult your bankruptcy attorney and a real estate agent who is familiar with these situations.

Emotional Considerations

Buying a new home before selling your current one can bring stress and anxiety, especially because you are uncertain how quickly your home will sell or at what price. Managing two properties at once, with their mortgages and maintenance, can feel overwhelming.

While the excitement of a new home is thrilling, it’s important to stay grounded and make decisions carefully. You may seek the help of professionals like real estate agents, who can help ease the emotional pressure and guide you through the process with clarity and confidence!

Tips for Successfully Managing Both Transactions

If you decide to put an offer on a new home before selling your old one, here are a few practical tips:

• Work with a Trusted Real Estate Agent – A licensed real estate agent can guide you through the process, helping to set realistic expectations and ensuring that you follow key steps.
• Prepare Your Current Home for Sale – Get your current home ready for the market quickly. This might mean improving the outside or setting up the interior to attract prospective buyers.
• Be Ready to Move Fast – Whether you’re securing a mortgage or negotiating offers, be prepared to move quickly when needed. This is especially important if you’re in a competitive market and you’re able to buy or sell a house quickly.

Navigate Your Home Transition with Confidence Through FlipSplit

In the end, deciding whether to put an offer on a new house before selling your current one is a personal decision that requires careful thought. Consider the financial implications, potential risks, and market conditions, and make sure you’re emotionally prepared for the process. With the right strategy — and perhaps a bridging loan or other financing options, you can handle the challenges and successfully manage both transactions.

If you’re looking for a hassle-free way to sell your current home while making your new purchase, FlipSplit is here to help. We simplify the process by offering a fair cash offer and handling the heavy lifting, including any necessary renovations, while you move on your schedule. Plus, with FlipSplit’s unique profit-sharing model, you can enjoy additional profits once your old home sells. Get your free, no-obligation offer today and experience the easiest way to transition from your old home to your new one.

Reviewed by: Brandon Brown

As a long-time Asset Manager, Investor, Real Estate Agent, and Broker/Owner of BayBrook Realty in Orange County, Brandon Brown is one of FlipSplit’s lead Real Estate experts. Having worked on over 2,000+ real estate transactions, Brandon brings a depth of knowledge that ensures clients are appropriately treated with honesty and integrity. His insights and advice have been published in numerous blogs beyond FlipSplit, and he keeps a close eye on market trends and statistics, which are updated weekly on his social media pages. Outside work, you can find him participating and serving at church, cycling, mountain biking, surfing around Orange County and beyond, and enjoying time with his wife and two daughters.

Sources:

1. Kagan, J. (2024, May 13). Second mortgage: What it is, how it works, lender requirements. Investopedia. https://www.investopedia.com/terms/s/secondmortgage.asp
2. Kagan, J. (2024, February 27). What is a bridge loan and how does it work, with example. Investopedia. https://www.investopedia.com/terms/b/bridgeloan.asp
3. Akin, J. (2022, May 8). Buyer’s Market vs. Seller’s Market: What’s the Difference? https://www.experian.com/blogs/ask-experian/buyers-market-vs-sellers-market/