Whether a current homeowner is looking to upgrade or downsize, move out to the country or get back in the city, the first question they often wrestle with is, “Should we buy our new home or sell our current one first?”

If you already own a home, both strategies have their pros and cons. While there isn’t one easy answer that fits every home shopper, here are some things to keep in mind:

Reasons to sell your current home first:

• Negotiating power. By selling your home first, you’re in a position to know exactly how much you have to spend, and you’re ready to spend it as soon as you find your dream home.
• No risk of two house payments. If you buy a new home first, and your current home doesn’t sell quickly, you might find yourself making two payments.
• Peace of mind. Some people simply don’t deal well with the looming financial and practical turmoil of owning two homes. Not only is it twice the cost, but it’s twice the maintenance too.
• The bank. Sometimes your financial position may make the decision for you. Depending on your current monetary situation, the bank may not approve you for a loan on a second home without selling your current house first.

Overall, selling your current home first is the only option for some people. If you’re unable to qualify for two mortgage payments, your options get narrower. You can make an offer on a new house contingent on the sale of your current home, meaning that the agreement to buy the new home only goes into effect when your current one sells. While this seems like a big upside for buyers, and it is, in a competitive market, where a seller might expect to receive other offers on their house, they likely won’t even consider an offer with that contingency. Of course, if you do sell your home first, there can be a lot of pressure on your shoulders when you have to vacate the house within 60 days. If you have no other choice than to sell first, you might consider asking for 90 days to vacate the house, or even finding a temporary rental until you locate the perfect new home.

Reasons to buy a new home first:

• Less pressure to find your new home. Once your first house sells, you may only have 60-90 days to move out. That’s a tight time frame to find the perfect house.
• Risk of being between homes. If you sell your home first, and can’t find a new home in time, you’ll have to make temporary living arrangements either in a short term rental or with friends and family.
• Your pets and belongings are always safe. In the event of having to make a temporary living arrangement, where to keep pets and belongings can be a real headache.
• Plenty of shopping time. If you’re planning to buy a new home first, you have as long as you like to keep looking for that perfect house. And, depending on how precise your demands are for a new house, it can sometimes take a little while.

If you’re in the financial position to swing it comfortably, buying your new house first is certainly the less stressful option. On the other hand, even if your bank gives its approval, if you can’t comfortably make two house payments for several months, it can become very stressful very quickly. If you do decide to go this route, make sure to discuss it with your real estate professional. They can help insure that the price you hope to get from your current home won’t leave it languishing on the market for longer than you can afford.

Either way, as long as you take a careful look at your financial situation, make a plan to handle the challenges and discuss your options with a qualified real estate professional, there’s no reason to let the buy or sell first question keep you from owning your dream home.

Photo by Raymond Bryson

Photo by njaminjami