How to Sell and Buy a House at the Same Time

Twice now, I’ve been faced with selling and buying a home at the same time. In both instances, my husband and I focused on selling first and renting in the meantime.

This wasn’t ideal, since we were left making mortgage and rent payments for several months, but it was all we knew to do at the time. How else were we supposed to get the money for a down payment? We had no idea other options were available.

"The best-case scenario is when a buyer has enough liquidity that they are not relying on the proceeds of their current home to complete the purchase," says Cindy Raney, a global luxury property specialist and founder of Cindy Raney & Team in Connecticut. However, many people don't have that kind of cash, meaning they need to sell in order to buy.

While buying and selling is challenging at any time, high interest rates coupled with home prices are making it difficult to secure buyers in many markets, while limited inventory is making it harder to find a home — since many homeowners with low locked-in rates are hesitant to move.

If you’re one of the 57% of home buyers navigating this challenging scenario,[1] there are options to make it easier and more affordable. Here's how to decide which option is best for you.

Where selling and buying a house at the same time gets tricky

Say you’re relocating for a new job. Ideally, you’ll get a purchase offer on your current home and go into contract on your next one soon after. You have cash to put down on your new place, and move straight into your new home without needing temporary housing.

“It’s ideal but logistically uncommon,” says realtor Darren Robertson, founder of Northern Virginia Home Pro. For one, it's rare that closing dates will perfectly align, he explains. And if you're relying on mortgage financing for your next home, lenders may not approve the loan before your old house sells, since you'll technically have two mortgages on the books.

The more likely scenario is that you'll be choosing between two options:

• Buying first, selling later
• Selling first, buying later

Should you buy before you sell, or sell before you buy?

If you buy first, you’ll typically need to include a home-sale contingency in your offers, stating that you can’t close on a new house until your current home sells. But in a competitive market, sellers may not want to accept this type of contingency, since their ability to move now depends on two home sales going according to plan.

Buying before you sell also means having to come up with cash for a down payment and dual mortgage payments while you list your old house. “Buying first only works when a client has the financial ability to carry two homes,” says Raney.

"Selling before you buy is the less risky option," agrees Robertson, "especially if you’re operating with a tight budget. You’ll know from the sale how much you can allocate to the next property and be in a stronger position to negotiate."

However, Robertson notes a few caveats: For one, you'll have to pay for temporary housing while you house hunt — and either store your things or move them twice. "You’re also at the mercy of the market in the meantime," cautions Robertson, "and if conditions worsen, you’ll be in a worse spot than you anticipated when you sold."

Each option comes with advantages and drawbacks, which we’ll look at in more detail below. “The decision isn’t about preference; it’s about liquidity, leverage, and how much risk a client can realistically take on,” says Raney.

Option 1: Buy a house before you sell

Your first option is to buy your new home before selling your current one. This makes the most sense if you're confident your home will sell quickly. “If it’s in a desirable location where supply is tight and your surveys all come up sparkling, it’s a fair assumption that it won’t last long on the market,” says Robertson.

Buying first can also be a convenient option if you want to move out of your current house and renovate it to increase its potential sale price. But remember, you’ll have to come up with the down payment and carry two mortgage payments, which can add up if the transaction drags out.

There are many ways to buy first and sell later, such as a buy-before-you-sell program or a home-sale contingency.

Use a buy-before-you-sell program 

Buy-before-you-sell programs allow you to purchase a new home before selling your current one. Typically, the new home is purchased with a bridge loan or equity advance that’s based on your current home value. You move when you're ready and repay the loan once your old house sells.

If your house fails to sell within a specified period (usually 4–6 months), the buy-before-you-sell company will typically step in to purchase it — albeit for less than the listed price.

Going this route frees you from the home sale contingency and lets you avoid paying two mortgages out of pocket. However, there are extra service and origination fees, which typically start at 2–4% of the sale price. You'll also accrue carrying costs (ongoing mortgage payments, taxes, utilities, maintenance, etc.) during the time it takes to sell your house.

"I’d only recommend buy-before-you-sell programs (Knock, Homeward, etc.) if the market is hyper competitive and you need to move now to secure a property you intend to keep. Otherwise, the fees and contracts just aren’t worth it," says Robertson.

Apply for a traditional bridge loan

You can also get a bridge loan from a traditional mortgage lender to buy before you sell. You can direct the funds toward a down payment or an existing mortgage — whichever need is greater.

Because bridge loans are designed to “bridge the gap” between making an offer on a new house and getting the funds from the sale of your old house needed to close, they typically come with a repayment term of less than a year.

Bridge loans give you access to instant cash. And because you’ll own your new home from the start, you won’t have to pay rent.

“Bridge loans are much more reliable if you meet the high criteria for acceptance and want to avoid contingencies, but not everybody will be able to take advantage of them,” Robertson says.

You typically need at least 20% equity in your home to qualify for a bridge loan,[2] and you’ll use your home as collateral. Bridge loans also carry higher-than-average interest rates due to their short-term nature. Closing costs and fees for the loan can be 1–3% of the loan amount.

Request a home sale contingency

With a home sale contingency, you’ll make an offer on a new home, but that offer will be contingent on selling your current home first. You can also use a contingency when you sell, which will allow you to back out of the sale of your home if you’re not able to find a new home.

One good thing about a home sale contingency is that if you’re unable to sell your home in a reasonable amount of time, you’re off the hook. Including a contingency can also make it easier to line up closing and move-in dates for both properties.

On the downside, the other buyer or seller will need to agree to your contingency, which they may be reluctant to do — especially if they're also trying to buy.

"In practice, this only works in a true buyer’s market or when a property has been sitting for some time. In today’s low-inventory environment, sellers are rarely willing to accept that level of uncertainty," says Raney.

Seek a home equity loan or line of credit 

A home equity loan is a traditional loan that is based on the equity in your house. It usually comes with fixed payments and fixed interest rates. You can use the loan however you want, including making a down payment on a new home before your current one sells.

A home equity line of credit (HELOC) is similar in that it’s also based on your home’s equity, except it’s a type of revolving line of credit. You are given a credit limit and can draw on it as needed, similar to how you would use a credit card. The ability to access funds when you need them gives you much-needed flexibility to handle any challenges that may pop up during the transaction.

Also, you’ll only pay interest on the portion of the line of credit you actually use, and the rates and fees may be better than bridge loans. But interest rates may be variable and could rise, making repayments more difficult.

You typically need 15–20% equity in your current home to qualify.[3] And if you fail to repay and default on the loan, you could lose your home.

Tap your investment accounts

You can also cash out your investments to pay for a down payment on a new home or even to buy it outright before selling your current one. This immediate cash infusion enables you to make a strong all-cash offer on the property.

When selling stock to buy a house, you’ll need to consider any tax obligations, especially capital gains tax, which will vary depending on how long you’ve held the stock for and what your current income is.

While using investments is convenient and can make financial sense, you may also lose out on future growth in your investment portfolio by putting it into your home instead. Whether using your investments to pay for a home makes sense depends on the health of both the current and future housing and equities markets, as well as interest rates.

Plan for overlapping mortgages

If you're fortunate enough to afford higher monthly expenses temporarily, you could plan to have a few months of making two mortgage payments. This way, you’d simply buy your new home and pay two mortgages until your old house sells.

There’s no need to line up the closing and move-in dates on both properties, allowing you to take your time moving into your new home. This option even lets you go ahead and move out, making the process of selling (i.e., home improvements and showings) less disruptive.

However, getting a new mortgage while you're still paying off your current one may be tricky since your debt-to-income (DTI) ratio will go up. Lenders may be unwilling to pre-approve you for a second mortgage if your DTI ratio is too high.

Plus, there’s no guarantee of when your old house will sell, which means you could be paying two mortgages for a lengthy period.

Option 2: Sell first, move later

Another way to sell and buy a house at roughly the same time is to focus on selling your house first and then moving later. This approach takes some of the pressure off of trying to sell as quickly as possible once you’ve found your new home.

“Selling first is often the safer financial move, but it introduces uncertainty on the buying side, particularly in competitive markets where timing and leverage matter,” Raney said.

Some sell-first options, such as cash buyers, are reliable, but you may forgo higher profits. With other options, you could end up paying more.

Sell to an iBuyer or other cash buyer

Cash buyers, such as iBuyers or “we buy houses” companies, can buy your house fast, sometimes allowing you to close in just a couple of weeks. These companies tend to be very flexible with timelines, allowing you to choose your own closing date and modify it if needed.

All-cash deals are less likely to fall through due to financing issues. There’s also no need for you to make home improvements or host open houses or showings.

However, in exchange for this convenience, you’ll have to accept a lower selling price. Depending on the condition of your home and the local housing market, investors might only pay 60–80% of your home's fair market value. iBuyers like Opendoor may pay slightly more, but will also charge service fees and may reduce their final offer following an inspection.

While investors will buy properties in nearly any condition, iBuyers have strict eligibility requirements, so not every home will qualify.

Negotiate a lease-back agreement

Rent-back agreements (also called lease-back agreements) let you sell your home first and then live in it as a tenant until you can close on your new home. As Alex Coffman, Co-Owner of Teifke Real Estate, says, a lease-back agreement “lets you stay in residence while searching for a new place, reducing the need for temporary housing.”

Rent-back agreements take the pressure off of trying to line up the buying and selling processes. Some buyers may even be willing to negotiate flexible timelines that work better for you.

You may also feel less pressured to find a new home right away. Plus, you’ll have the reassurance of knowing that when you do find your new property, your current home has already sold.

However, not all buyers are willing to offer lease-backs. Some buyers may also expect a lower sale price in exchange for a lease-back agreement, reducing your profits. What’s more, you’ll have to pay rent and a security deposit after your house sells.

Ask for a longer closing period 

When negotiating with a buyer (especially if the buyer asks for repairs following an inspection), you can always request a longer closing period. This will give you time to find a new home while still being able to live in your current home. Even better, there’s no need to arrange temporary accommodations between properties.

You’ll also be reassured knowing that, when you do find your new home, your old one has already sold.

But not all buyers will be able or willing to entertain a longer closing period, which could reduce the number of offers you get. Buyers who are open to an extended closing period may expect something in return, such as a reduced sale price.

You’ll also have to move out by the closing date, even if you haven’t found a new home. “You still need a smart plan even in this technically safer route,” Robertson said.

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