The Chicken-and-Egg Question: Buy or Sell First?

For homeowners aiming to sell their home and buy another, it's the classic real estate, which came first, the chicken or the egg, question - buy or sell first?

If you sell first, you may find yourself under a tight deadline to find another house, or be forced in temporary quarters. If you buy first, you may be saddled with two mortgage payments for at least a couple months. You may need the money from the sale of your original home in order to pre-qualify for a loan for your new home. You may be facing a job relocation and need to sell quickly.

There are many variables involved; there is no universal correct answer. It basically comes down to your specific circumstances.

Dan Gregor, a Realtor in Pickerington, Ohio, says there is generally less pressure when you sell first.

"It really comes down to risk," Gregor said. "It's whether you want the risk of owning two houses, or possibly none at all."

Gregor says that if you have the money to make two mortgage payments, the pressure is off. But if you need to sell your house in order to qualify for a loan, then you have no choice - you'll have to sell first.

"You can write contingent contracts, but if you really want the home, you'll pay a premium - that's if the seller will even entertain a contingent offer," he says.

And if you go ahead with a contingent offer, then you may end up settling for less for the house you're selling in an effort to get it sold quickly.

Gregor says for most people, the stress level is lower when you sell first.

"You have time to get pre-approved for your mortgage and see all the housing options in the price range you'd like to buy," he said.

When your selling house is in contract, he suggests you pick the three best homes of those you've viewed and prepare to make an offer on the one that best meets your needs.

"The absolute worst that can happen is the right home isn't available," Gregor said. "You end up in a short-term rental with the cash in your pocket and pre-approved financing for the balance you need. So you look like a cash buyer when you make an offer on the home you finally decide on."

But brisk selling conditions in some parts of the country require more aggressive tactics.

Brett Furman, a broker in suburban Philadelphia, says the strong market dictates that homebuyers focus on buying first, and selling later.

"The housing market in the suburban Philadelphia market is moving very quickly," said Furman. "Normally we advise our buyers to sell their home first and buy second ... However with the faster moving market, we are advising many of our buyer clients to obtain a mortgage commitment that is not contingent upon selling their existing house."

In their book, House Selling for Dummies (Hungry Minds Inc., 1999), Eric Tyson and Ray Brown "strongly recommend" that you sell first.

"Even in good real estate markets, sales frequently drag on much longer than you expect," the authors say. "Selling in a weak market usually compounds the problem. Homeowners tend to overestimate their house's resale value and underestimate the length of the selling process - a fiscally deadly one-two punch."

But selling first isn't the perfect solution. Some of the issues that may come up include:


Being forced out of your house before you have a new place available. Where will you live? Where will your kids go to school?

Having to move twice. Do you want to go through the hassle? Where will you store your extra furniture while you live with family and friends or rent an apartment?

Not being able to find a house you like. How long are you willing to live in temporary quarters until you find a suitable house?
Whichever way you go, it always seems to work out in the end, at least in Gregor's experience.

"I've been in the business for 30 years," he said. "We've never had anyone out on the street and the vast majority of our clients that make double moves are those building new homes that had to have their property sold first."