Should I sell my house before I buy land?

If the land is bought with money already in the bank, the order is mostly a question of convenience. Once a loan is involved, the lender's rules start deciding for you.

Land without a dwelling is a narrower lending market than a house. Fannie Mae's Selling Guide says it does not purchase or securitize mortgages on vacant land or land development properties, on agricultural properties such as farms or ranches, or on properties not readily accessible by roads that meet local standards. That describes what Fannie Mae buys, not what every lender offers, and the full argument is in whether a regular mortgage can buy land. The practical effect on timing is that the loan for the land may come from a different kind of lender, on different terms, than the loan that bought the house.

For working farm ground there is also a federal program, the USDA Farm Service Agency's Farm Ownership Loans, taken up on the regular mortgage page linked above. Whether a buyer qualifies is for the lender and the Farm Service Agency.

Whether any lender will count the proceeds of a house that has not sold yet, and on what proof, is the lender's call and nobody else's. That answer bears directly on whether a home-sale clause comes up in the land purchase contract at all.

Federal disclosure deadlines add their own floor to a financed purchase, and some farm and commercial credit sits outside them; both are on the calendar in how long closing takes on land. The closing costs on each side show up on the loan forms or on the settlement statement.

A land seller who carries the note is a third way to pay, with its own rules, explained in seller financing on land.

The other order trades one kind of uncertainty for another. The money is settled; the land is not.

Once the house closes, the net proceeds after the closing costs and payoffs are a figure on a signed settlement statement rather than an estimate. A land offer written after that can go in without a property contingency, which is exactly the kind of offer the kickout status above describes a seller as able to accept over a contingent one. The cost is the gap: somewhere to live between the house closing and the land being ready.

The tax side of the house sale belongs to the IRS and a CPA. The IRS says a seller may qualify to exclude up to $250,000 of gain on the sale of a main home, or up to $500,000 on a joint return, if the tests are met. Those tests, and how they differ from a sale of land, are covered in whether you pay capital gains when you sell land. Whether a sale plus a later land purchase changes anything for a particular return is a CPA's question.