Key points
- Know your net proceeds and your lender approval before you choose an order.
- A sale contingency lets you buy without risking two mortgages, but sellers can keep marketing their home.
- A seller leaseback of up to 90 days lets you sell first and still move only once.
- Same-day closings at one title company are the cleanest way to use sale proceeds for the next down payment.
Should I sell my house first or buy the next one?
Sell first if you need the equity to buy. Buy first if you can qualify with both payments, or have cash or bridge money, and the next home is hard to find. In a slow stretch for your type of home, selling first is usually safer. When the right house is rare, buying first may be worth the carrying cost.
Ask yourself these questions:
- Does my down payment depend on this sale?
- Can I qualify for the new loan with my current mortgage still counted?
- How many months of both payments could I carry?
- How quickly do homes like mine sell right now? Your agent can show you current sales on your street.
Can I use money from selling my house as a down payment?
Yes. Most move-up buyers fund their down payment from the sale. The lender needs to see the money come from the sale, so it will ask for the final closing statement.
When both closings happen the same day, the sale usually closes and funds first, in the morning, and the purchase follows. Using the same title company for both makes that simpler. Tell your lender at the start that the down payment depends on the sale.
How do I line up the closing dates on two houses?
Work backward from the purchase. Match the closing date on your sale to the same day or a few days before the purchase, and add a leaseback if you need room.
- Get your home under contract first, or at least listed, before you make an offer that depends on it.
- Ask for a closing date on your sale that falls on or just before the purchase date.
- Use one title company for both if possible.
- Keep the option periods and financing deadlines of both contracts on one calendar.
- Add a Seller's Temporary Residential Lease if you need days or weeks after your sale closes.
A typical same-day plan looks like this. Your buyer's option period ends first, so you know the sale is firm before your own option period on the purchase runs out. Both loans get approved in the same window. On closing day, you sign the sale in the morning, the buyer's lender funds, and the title company moves your proceeds to the purchase that afternoon.
Build in a small cushion. Lenders and title companies can need an extra day for a final document, so a leaseback of even a few days on your sale keeps a one-day delay from becoming a moving-day problem.
What should I tell my lender before I start?
Tell your lender the whole plan on the first call: that you own a home, whether you intend to sell it first, and that the down payment depends on the sale. The lender can then tell you which orders you qualify for.
- Whether you qualify for the new loan with your current mortgage still counted.
- What it needs to accept a sale contingency or same-day closings.
- Whether it offers a bridge loan or a home equity line, and on what terms.
- Whether it allows recasting the new loan after your sale.
- How long your preapproval stays valid if your sale takes longer.
Can I buy a house contingent on selling mine?
Yes. The TREC Addendum for Sale of Other Property by Buyer makes your purchase depend on receiving the proceeds of your sale by a date you agree on. If your home does not close by then, the contract ends and your earnest money is refunded.
The trade-off: the seller can usually keep the home on the market, and if a stronger offer arrives you get a short window to waive the contingency or step aside. If you waive it and your sale then fails to close, you are in default on the purchase.
List your home right away, ask your lender whether you qualify without the sale, and offer with a contingency. An offer is stronger when your home is already under contract or priced to sell quickly.
What's a leaseback, and can I stay a few weeks after selling?
A leaseback lets you close your sale and stay as a tenant. Texas uses the Seller's Temporary Residential Lease for stays of up to 90 days. You agree on the rent, a deposit and the move-out date, and you carry renter's insurance while the buyer insures the house.
Leasebacks often remove the need for temporary housing. Negotiate one as part of the offer, and check that the buyer's lender allows the length you want, since some limit it. If you will need more than 90 days, a standard residential lease is used.
How do I avoid paying two mortgages, and can I get a bridge loan?
The surest way is to sell first, or to buy with a contingency. If you buy first, plan the money in advance:
- Savings or investments to cover the down payment and a few months of both payments.
- A home equity line, or HELOC, on your current home, opened before you list, since lenders generally will not open one on a home for sale. Texas has its own rules for home equity loans, so ask the lender how they apply.
- A bridge loan, a short-term loan against your current home. Some lenders offer them in Texas, fewer than in many states, and they usually cost more than a standard mortgage.
- Recasting, where some lenders let you pay down the new loan with your sale proceeds and lower the payment.
Compare at least two lenders. More on loans is on the costs and financing page.
What if I have to move before my house sells?
List it vacant and keep it in good shape. Keep the utilities on for showings and inspections, and call your insurer, because many standard policies limit coverage once a home sits empty. Arrange for someone to check the house regularly.
A vacant house often photographs and shows better with light staging. See selling your home for how I prepare and market a listing.
Questions people ask
What if I find my dream house before selling mine?
List yours right away and offer on the new one with a sale contingency, or buy first if your lender approves both payments. Your agent can ask the seller whether a contingency would be accepted before you write the offer.
Will I need temporary housing between selling and buying?
Often not. A leaseback or same-day closings usually remove the gap. Plan on a short-term rental only if neither is possible.
Does a sale contingency make my offer weaker?
It can, because the seller takes on the risk that your sale fails. It is stronger when your home is already under contract, priced to sell, or when the seller is not in a hurry.
Andy Scott is a Dallas Realtor and founding member of the GPS Group at Dave Perry-Miller Real Estate. He grew up in Dallas in a real estate family, has been licensed since 2005, and has helped buyers and sellers for more than 20 years. About Andy · Sell and buy at the same time
