There’s no right or wrong answer to that question, but you should think carefully about your needs, financial status and tolerance for risk before you commit to either strategy, because both options come with advantages and disadvantages. When you’re ready to make a move, work closely with a registered real estate salesperson who can answer your questions and provide practical advice.
Buying first—pros and cons
When you commit to buying first, time is on your side during the home search. You have the luxury of thinking carefully about the type of home that’s right for you, and the freedom to visit an unlimited number of homes in your preferred neighbourhoods until you find one that fits your lifestyle. Moreover, you don’t have to worry about a rapidly approaching closing deadline, and there’s no danger of you having to find a temporary place to live, or moving twice.
While time is on your side in a buying-first transaction, money isn’t. You will have to find the funds necessary to make a deposit (and possibly also a down payment if you plan on obtaining financing), which could be difficult if your equity is tied up in your current home. And if you are able to make an offer, you might find yourself owning two properties at once for an undetermined length of time. That could mean paying two mortgages as well as other expenses such as home insurance, property taxes and utilities for both homes. With so many bills to pay, you may feel some pressure to set a modest listing price or accept a lower-than-expected offer on your current home.
Selling first—pros and cons
When you sell first, you can set a sale price that meets your needs and you’re under a lot less pressure to accept the first offer that comes your way. And after you have sold your home, you’ll have a better idea of what you can afford to buy.
The drawback to selling first, however, is that as soon as you accept the buyer’s offer, the clock will start ticking towards the closing date. You will need to find a new home fairly soon, which might be a problem if you’re highly selective about the location or the type of housing you wish to purchase. You may feel pressured to make an offer on a home that doesn’t exactly fit your lifestyle, or to look at rental units for temporary housing, which would mean moving your furniture and personal belongings twice.
Have a backup plan
Regardless of whether you’re buying or selling first, you should formulate a backup plan if problems emerge: do you have friends or relatives who could lend you money, or provide you with accommodations while you wait for a transaction to close? It’s always nice to know how to handle a worst-case scenario.