If you’re in the market for a new home, but, like most homeowners, you need to sell your old one, what’s the best way to handle the logistics? Should you sell first and then look for a new place? Or is it better to find your next home first and then put your existing home on the market?
“It depends,” says Sammy Lyon, an associate broker with Dow Capital, a boutique brokerage in Los Angeles. “While it’s possible to buy before you sell, risks are involved. You have to work with your agent and be prudent so you’re not just flying blind.”
In July 2022, Lyon represented the buyers of a three-bedroom, bungalow-style home in Burbank, California, that was listed for $1.25 million and went under contract in eight days, closing shortly thereafter for $1.3 million. It was only after his clients purchased that home that they listed their two-bedroom condo in Burbank – which itself went under contract two weeks later and sold for more than the asking price.
“The houses they were interested in were going over ask very quickly,” Lyon says. The couple also had a 2-year-old child and wanted to avoid the disruption that comes with selling a house as well as the risk that they might have to move into temporary housing if their house sold before they found a new one. Lyon says his buyers were able to close on the new house because they received a gift from a family member to cover the down payment.
The Pros and Cons of Buying First
In a competitive market, where there are few homes for sale and available homes often receive multiple bids and sell for more than the asking price, buying before you sell may be the only way to lock down a new place. The worst-case scenario in a strong sellers’ market is selling your home quickly before you’ve found a new one – and then having nowhere to go.
Buyers with kids and pets may find it easier to purchase first as well. It’s challenging to maintain a home in show-ready condition, and it’s disruptive when strangers traipse through your home during showings. Plus, many agents prefer to market empty homes.
“I prefer selling vacant houses because most people don’t have furniture that looks like it’s straight from HGTV,” says Rachel Kilmer, an agent with ReeceNichols Real Estate in Lee’s Summit, Missouri, who serves the greater Kansas City area. “Many times, a vacant home shows better because you can get it really clean. Plus, buyers can visualize their stuff in the home more easily – and it appears bigger in photos.”
Of course, if you purchase first and can’t sell your home quickly, you risk being on the hook for not only two mortgage payments but also the carrying costs of both homes, and that can get expensive fast. To avoid a financial crisis, do your homework – know how much you will net from the sale of your present home and how long it should take to sell under current market conditions. That way, you can take a calculated risk after reviewing all the details with your agent.
Structuring a Purchase When You Haven’t Sold Your Home
There are a number of ways to structure the purchase and sale transactions when you plan to buy first.
Pay cash. This is the simplest way to purchase a new home before you sell your existing one. Many homeowners have equity in their homes, according to data provider Intercontinental Exchange, which reported in March 2025 that U.S. mortgage holders were sitting on $17 trillion in equity entering 2025, including $11 trillion in tappable equity that could be borrowed against while still maintaining a 20% equity stake in their homes. These homeowners can tap that equity via a home equity line of credit (HELOC) or a bridge loan, which, according to Jeremy Bordner, a regional vice president at LoanDepot, “is gap financing, a short-term loan that helps you bridge the gap between buying your new home and selling your old home.” Bridge loans typically have a 12-month term and are not renewable, he says.
Mortgage the new home. If you can qualify for two mortgages based on your income, assets and credit, you can move ahead with the purchase and finance it with a mortgage. Kilmer says this is what most of her clients do. They put a minimum down payment on the new house, close on the purchase and then, once they’ve sold their existing home, they recast the mortgage to pay down the principal balance and lower their monthly payments.
Collateralize other assets. If you own investment real estate, a stock portfolio or other assets, you can borrow against them to close on the new home.
Borrow from your 401(k). While distributions from a 401(k) may trigger taxes and a penalty, borrowing does not, according to Mari Adam, a certified financial planner in Boca Raton, Florida. “If your plan permits, you can do a 401(k) loan and pay it back with interest,” she says. “Otherwise, it may count as a taxable distribution.” Your plan will determine the amount you can borrow and under what terms. Of course, since this money is set aside for your retirement, it’s essential to pay it back to keep your retirement savings on track.
Consider an iBuyer. An iBuyer is a company that will buy your house quickly for cash. “Being able to buy a home before you sell your current one is, for most, a luxury,” says Nick Boniakowski, head of agent partnerships for Opendoor, a San Francisco-based iBuyer that operates in 50 markets nationwide. “We help address that by providing sellers with the certainty of a cash offer and the flexibility to close on their schedule.” Boniakowski says that sellers can typically close as soon as 15 days after receiving a cash offer, or up to 60 days later, and the closing date can be rescheduled if necessary. Sellers pay a service fee of 5% of the offer price.
If you’re planning to purchase a new home before selling your existing one, be sure to do your due diligence. Ask your agent for a “seller net sheet,” a document that will itemize all the costs involved with the sale and include an estimate of the amount you should net from the deal. That way, you’ll have a better idea of what you can afford on the buy side.
“Plan for the worst, but act with confidence,” says LoanDepot’s Bordner. “Know exactly how long you could carry two homes, have backup financing in place and be realistic about your current home’s marketability and pricing. Many people think their home is worth more than it really is.”
Read more at U.S News
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