2 homes Buying before Selling

What are some common mistakes homeowners make when deciding to buy a new house before selling their current one?

Thinking about buying a home before selling your current one? You’re not alone—it’s a common consideration, especially in the competitive Santa Cruz real estate market and its nearby charming towns like Scotts Valley and Capitola. Whether you're after more space, a change of scenery, or a job relocation, securing your next home first might seem like the best solution.

But before you take the plunge, you must understand the potential risks. Buying and selling at the same time isn’t as easy as it sounds. While it’s possible, it requires a thoughtful strategy, a solid understanding of the market, and expert guidance to make it work. Planning ahead is key to navigating the challenges and making the process smoother.

How can interest rates impact the decision to buy or sell a home in 2025?

The year promises a mix of both positive and challenging news for the real estate market.

More Deregulation Possible:

There are likely to be more property options available for buyers. During his campaigns, President Trump talked about his intention to permit new home construction on select federal lands. In Santa Cruz, there’s some federal land, like Cotoni-Coast Dairies which was donated to the BLM in 2014 by The Trust for Public Land, and other parts of Santa Cruz, could potentially be utilized for this initiative. Trump also suggested tackling regulations that have made building homes a tougher job. These changes may face litigation challenges and some of the directives may lie outside the of the courts. As of 2021, regulations imposed by federal, state, and local governments added $93,870 to the average sales price of a new single-family home, which was $397,300, according to the National Association of Home Builders. This amount represents 23.8% of the total cost. Of the $93,870, $41,330 was due to regulations during the development phase, while $52,540 came from construction-related rules. Given the inflationary pressures since 2021, these figures are likely even higher today in 2025.

Governor Newsom cut more red tape by further streamlining permitting laws to accelerate rebuilding Los Angeles. According to the National Association of Realtors (2023), the country is facing a housing shortage of between 4 to 6 million homes. Yet, only about 23% of these homes are within reach for families making a median income of $75,000 or less.

The Harsh News:

Even if mortgage rates fall, they likely won’t decline enough to significantly improve affordability. As a result, some homeowners may choose to keep their properties off the market as long as rates remain elevated.

Buyers Grapple with Mortgage Rates

Buyers in 2025 have many overriding questions about the cost of home loans. Mortgage rates have been a key topic of concern for years. The 30-year mortgage rate remained above 6.5% for much of 2024, occasionally surpassing 7%. While some forecasters were initially confident that rates would drop below 6% in 2025, recent trends suggest that rates will likely remain above 6% throughout the year.

For more than a decade, mortgage rates stayed below 5%, creating an environment where buyers and refinancers became accustomed to low rates. But we're now entering what some have referred to as the "new normal”. The Santa Cruz properties market is starting to notice that buyers are adjusting to the new reality with interest rates. Now, they're coming to grips with the fact that things have changed.

So, what’s the best path forward? Should you sell before buying or buy before selling? There’s no one-size-fits-all answer—it all depends on your situation. But here’s what you’ll want to consider as you move forward:

What factors should you consider when preparing your current home for sale to ensure a successful transaction?

Timing is everything when it comes to buying a home. If you're thinking of purchasing a new place before selling your current one, there are some serious risks to consider, especially in a hot market like Santa Cruz.

The Financial Pressure: Juggling Two Mortgages

If your home doesn’t sell as quickly as you hope, you could find yourself paying mortgages for two properties. That extra financial burden might make your new home less affordable, or worse, put your whole plan at risk.

How can the timing of buying a new home and selling your old one affect your overall financial situation?

Markets move fast, and the timing of your sale and purchase has to line up perfectly. If your current home takes longer to sell than expected, or if there are delays with closing on your new home, you might end up with two properties for longer than you planned.

What local market conditions should you be aware of when contemplating buying before selling your home?

Most buyers rely on selling their current home to fund the next one, either through the full sale or by using the proceeds as a down payment. If you don’t have enough savings or other assets to cover the cost, buying before selling could create a financing headache.

Seller Skepticism: Winning Over the Seller

Sellers are often hesitant to accept offers from buyers who haven’t sold their current home yet. In competitive markets like Capitola, sellers want to feel confident that the buyer can close quickly and without issues.

Buying before Selling

Why Buying Before Selling Might Be Right for You

Despite the risks, buying before selling can have some serious benefits. If you're willing to manage the challenges, here’s how it could work to your advantage:

  • Secure Your New Home Without the Rush If you buy before selling, you won’t be scrambling for temporary housing if your current home sells quickly. You'll have a place ready to move into and won’t have to worry about paying for storage or finding a short-term rental. This can make your transition way less stressful.
  • Avoid Extra Costs If you sell first and don’t have a new home lined up, you could end up spending extra money on storage, moving fees, or even temporary housing.
  • Jump on Your Dream Home In fast-paced markets like Santa Cruz, desirable homes for sale don’t stay on the market long. If you find the perfect place, buying before selling lets you move quickly without waiting for your current home to sell. This can give you an edge in competitive bidding situations.
  • Skip the Hassle of Showing Your Home Keeping your home show-ready while you’re still living in it can be a pain. Staging, cleaning, and arranging showings can feel overwhelming if you're juggling a busy schedule.

Mistakes to Avoid When Buying Before Selling in Santa Cruz County

Navigating the real estate market in Santa Cruz County can be challenging, especially if you’re buying a new home before selling your current one. Here are some key mistakes to avoid ensuring a smooth transition.

1. Why is it important to get pre-approved for a mortgage before starting the home-buying process?

Before diving into listings, take the time to get pre-approved for a mortgage. It’ll give you a clear sense of what you can afford, so you’re not wasting time on homes that are outside your budget. Plus, pre-approval shows sellers that you’re serious, which can give you an edge in a competitive market.

2. Skipping Over Preparing Your Current Home for Sale

Get ahead of the game by:

Your home needs to be ready for potential buyers—and that means preparing it early. Properly staged homes sell much faster, often up to 73% quicker, according to the National Association of Realtors. Focus on decluttering, cleaning, and making necessary repairs. Don’t forget the exterior! Fresh landscaping and a new coat of paint can work wonders.

3. How can overlooking local market conditions lead to mistakes when buying a new house before selling your old one?

Timing is everything, especially when you’re juggling the sale of one home and the purchase of another. In areas highly competitive Santa Cruz real estate, market conditions can change fast, so make sure both transactions align.

Some things to consider:

  • Have a backup plan for housing in case there’s a gap between buying and selling 
  • If there’s a gap between the two, consider temporary housing or a bridging loan. This way, you won’t feel rushed or stressed.
  • Work closely with a local real estate agent to sync both transactions
4. Ignoring Local Market Conditions

Real estate markets are different depending on the neighborhood. In places like Capitola, Santa Cruz, and Watsonville, conditions can change quickly. If you overestimate how fast your home will sell or don’t give yourself enough time to find your next property, it can lead to unnecessary pressure. A local agent can guide you through these shifts, helping you time everything just right.

Why local knowledge matters:

  • Markets vary by neighborhood
  • A local agent will keep you informed about current trends
5. What strategies can homeowners use to avoid overpricing their current home when selling?

It’s tempting to price your home higher because of emotional attachments or big expectations, but overpricing can backfire. Homes that are priced too high tend to sit on the market longer. This can make your home seem less desirable.

How to avoid overpricing:

  • Price your home realistically from the start
  • Work with an agent who knows the local market (A skilled agent will help you set a competitive price that reflects the market)

Buying a home before selling your current one can be a smart move, but it does require careful thought and planning to avoid common pitfalls. The key is having a seasoned agent by your side—someone who truly knows the ins and outs of local markets like Santa Cruz, Scotts Valley, and Capitola. With their expertise, you'll be able to handle both transactions with confidence. Whether you're looking for homes in Santa Cruz or preparing to list your property in Los Gatos, the right guidance will make all the difference in ensuring a smooth and successful transition.

Thinking about buying or selling in the Santa Cruz area? Reach out to Paul Burrowes, a local expert who can help you every step of the way.

Paul Burrowes, CRS, CCEC, SFR, NHCP, LHC, REALTOR® Licensed REALTOR® with over 15 years of experience and expertise. Commits to being on time and transparent. Acts as your consultant to ensure you make the best decisions to fit your transaction at every step in the process. Negotiates towards a low-stress, win-win outcome. Handles all the details for you, ensuring the hundreds of steps in your real estate transaction go smoothly. Proudly serving Silicon Valley, Santa Cruz, Monterey, and Santa Clara Counties! | DRE# 01955563 | (831) 295-5130 | paul@burrowes.com |

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