Juggling the sale of one home with the search for another is tricky. List your home too soon, and you risk being homeless. Wait too long, and you’re carrying two mortgages.

You own a house now, but you want to move to a bigger place or a different neighborhood. Should you sell your current home before you buy your next, or should you buy first, then sell your existing one? Though this is a very common question, there is no “right” answer. The answer depends on a number of things.

First things first, talk to a realtor to get a sense of how quickly your home might move. If the timeline is tight, have everything you need as a buyer ready to go. Make sure you talk to your Mortgage Broker about what you can afford and how quickly they can close the deal. Go beyond pre approval and ensure you’re talking to someone who is collecting and reviewing all of your documents so that you can be sure of the numbers you’re working with.

Buying a Home First
Human nature being what it is, once the decision to move is made, people usually put a great deal of effort into finding that perfect home – sometimes without giving much thought to selling their current one. If, for a fleeting moment, they do consider whether to sell first, they figure they won’t have trouble finding someone eager to buy their charming home, so they once again focus on buying.

If you buy before selling, you’ll need to qualify for both mortgages. The good news is that the current home can be considered a rental property because you’ll be moving into a new owner occupied. The advantage here is that we can use rental income to help you qualify for both mortgages. Even if you sell in a few months, this may get you over the hump of qualification.

The other thing to consider is where will the down payment come from? If you’re not selling your current home are you going to refinance it to leverage some of the equity? Alternatively is the down payment going to come from savings or investments? All things that need to be thought out BEFORE you start looking!

If you’re going to refinance to access equity, you need to do it sooner rather than later – don’t wait until you start looking because it might limit your ability to move quickly on a purchase.

Selling Your Home First
Advantage: Selling your existing home before buying another has its advantages. By selling first you know how much money you’ll be getting on closing, which helps you establish a price range for the new home. Also, if you’ve already sold you don’t have to make your offer conditional on selling your existing home.

If you sell first you can also typically get bridge financing so if the sale of the current property and possession of the new property overlap, the lender will lend you the down payment short-term to get you into the new home without having to come up with more funds.

Disadvantage: The down-side is that you may not be able to find a satisfactory replacement before the closing on your current home, which means you may need to find someplace to live temporarily. Or, you may be tempted to settle for something that isn’t quite what you want.

Your Comfort Level
The bottom line is that whether you buy first or sell first is a personal decision. There are a number of factors that might influence your decision, but there is no right or wrong decision. And, you can always hedge your bet by making the offer with a condition providing for “Selling Your Home First”. If you decide to make such an offer, consider getting legal advice to ensure it’s phrased properly. As well, if someone makes a conditional offer to buy your home, it’s a good idea to obtain legal advice so that you understand what you’re getting into and how you might best protect your interests.