New Construction
Do I need to sell my current home before signing a new build contract?
By Steve Lockhart
The short answer
The order of a sell and a new build is a real decision with real tradeoffs, and there is no universal right answer.
Full answer
The order of a sell and a new build is a real decision with real tradeoffs, and there is no universal right answer. Selling first puts cash in your hand, removes the condition of the sale, and gives you a stronger negotiating position, but you need a place to live between closings and you risk the market moving while you wait for the build. Buying first locks in the new home you want but can mean carrying two mortgages if your current home sells slowly.
New construction makes the calendar the complicating factor, because the builder controls the schedule and the closing date can move both directions. Some buyers bridge the gap with a rent back, a short term rental, a home equity line, or a bridge loan, and some negotiate the builder's delivery around their sale. Others would not dream of two payments and sell first, willing to rent a furnished apartment for a few months.
The honest approach is a written plan with both dates on it: the builder's estimated and outside completion dates, your current mortgage and equity, your sale proceeds timing, your temporary housing options, and your cash reserves. Then you choose the order that your situation, not the builder's rhythm, dictates. The best plan is the one that protects you when the dates slip.
Go a little deeper
Frequently asked
Questions people often follow up on
Can I make my offer on the new home contingent on selling mine?
Some builders accept a sale of residence contingency, especially in slower markets or on finished inventory, and most resist it in strong demand phases because they are building for a specific buyer and schedule. If a contingency is not accepted, the alternatives are selling first or bridging the gap with your own financing.
What housing options bridge the gap between closings?
Rent backs from the new home's builder, short term rentals, staying with family, a sale with a lease back from your buyer, or a bridge loan and home equity line to manage two payments for a period. Each has costs and moving parts, and the right one depends on how long the overlap runs.
What is the safest order for a tight budget?
Selling first is usually the safest for a buyer who cannot carry two payments, because the proceeds fund the purchase and there is no overlap risk, and the cost is temporary housing. Budget both the two payment scenario and the rental scenario before you choose, and keep a written plan for each.
The Lockhart Method
The Lockhart Method
Your Home | My Strategy | Proven Results
My strategy: put both closings on one calendar before you commit to either. I map the builder's schedule against your equity, proceeds, and housing options, and cost out the overlap, so the order you choose is a plan with numbers, not a hope with dates.
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