There is no perfect answer, only the one that fits your money, your nerves and the market you are selling into. Sell first and you know exactly what you have to spend, but you might be packing boxes with nowhere to put them. Buy first and you move once, but for a while you may own two houses and carry two payments.
Texas has standard tools for both paths. Here is how each one works, and when we reach for it.
01
If you sell first
This is the lower-risk path. You know your number before you shop, and your offer on the next house isn’t tied to anything. The catch is the gap between closing on your house and moving into the next one.
Stay after closing with a leaseback. The Texas contract lets the parties agree that the seller hands over possession on closing and funding, or under a temporary lease.1 TREC’s Seller’s Temporary Residential Lease is designed for a seller who stays in the house for no more than 90 days after closing.2 It buys you time to find and close on the next house without moving twice. Any stay not covered by a written lease creates what the contract calls a tenancy at sufferance, which nobody wants,1 so put it in writing.
Negotiate the closing date. The closing date in a Texas contract is negotiated and written in.3 A buyer who wants your house will often give you a later closing, and that alone can line up the two moves.
Rent in between. Sometimes the simplest answer, especially if you don’t know yet exactly where you want to land.
02
If you buy first
This is the path people love emotionally and lenders scrutinize financially. You get to take your time finding the right house and move once. You also have to be able to close on it before your current house sells.
Make your purchase contingent on your sale. TREC’s Addendum for Sale of Other Property by Buyer makes your contract on the new house contingent on selling your current one by a set date.4 The seller can keep marketing, and if they get another acceptable offer, you have to waive the contingency, and deposit any additional earnest money the addendum specifies, or step aside.4 It works, but it makes your offer weaker, and in a competitive price range a seller may pass on it.
Qualify with both payments. Under Fannie Mae’s rules, if your current home is pending sale, the lender generally has to count both the current and the new payment when qualifying you, unless it has your executed sales contract and confirmation that the buyer’s financing contingencies are cleared.5 If your income covers both, buying first is much simpler.
Use a bridge loan. A bridge loan borrows against the house you are selling to fund the one you are buying. Fannie Mae treats a bridge loan as an acceptable source of funds but requires the lender to document that you can carry the payments on the new home, the current home and the bridge loan.6 Federal mortgage rules treat a bridge loan of 12 months or less, used to buy a new home while selling the current one, as a temporary loan exempt from the standard ability-to-repay rule.7
Tap your equity first. A Texas home equity loan or line of credit is limited: combined with all other debt on the home, it can’t exceed 80 percent of the home’s fair market value, it can’t close until at least 12 days after the later of your loan application or your receipt of the required notice, and you are limited to one such loan a year.8 It takes planning, and it has to be in place before your house is under contract.
Sell first if you want certainty. Buy first if you can carry the gap.
03
How we help people decide
We usually start with three questions.
How fast will your house sell? In a ZIP code with four months of supply, a well-priced house moves faster than in one with eight. Check Market Watch and our guide to how long it takes to sell in 75229.
What can you carry, and for how long? That is a conversation with your lender before you write any offer.
How competitive is the house you want? A sale contingency can work on a house that has been on the market a while. On a new listing with multiple offers, it usually won’t.
Most of the time the answer is a combination: list your house, negotiate a later closing or a leaseback, and shop hard while it’s on the market so you are ready to move the minute it’s under contract.
04
Selling first? Get ready now
Whichever way you go, the sale of your current house is the engine. Start with what your home is worth, read what to fix before you sell, and get your seller’s disclosure done before you list.
Everything we have written for sellers is on one page: Selling a home in Dallas →