Buy or Sell First?
Timing the Purchase
of Your Home

In an ideal world, you would put your current home on the market while looking for a new one. You'd find the home of your dreams at about the same time your existing home is sold. The closing on your existing home would be scheduled after the closing date on your new home purchase, simplifying the financial transactions and giving you time to pack and move.

In reality, things may not always work that smoothly.

Timing Complications
If you're depending on the equity in your old home to buy a new one but your old home doesn't sell in time, you may end up backing out of the new home purchase. That can cost you your deposit and may even result in legal fees. If you can afford to cover both mortgages, it may take months before the old one is sold, costing you thousands of dollars in loan payments, taxes and insurance on a home you no longer live in.

On the other hand, if you wait until your home is sold before looking, you may not find a new home before closing on the old one. You could find yourself moving twice – once into temporary housing and again when you find your new home. That can disrupt your family and add thousands of dollars in rent and moving expenses.

Finding Solutions
If you find yourself in a timing bind, consider one of these possibilities:

Contingency clause. You may include a contingency clause in your real estate contract that limits your responsibility for buying the new home by making the sale contingent on the sale of your current home by a specified date. Pro: If your old home is not sold, you are not tied into a contract for the new home. Con: Many sellers may not accept a contingency if they think they can get a contract from another buyer with no strings attached.

Timing the closing dates. If you have an offer on your current home, try pushing for a closing date further in the future. Then start shopping, and when you find a house you would like to buy, try and negotiate a quick closing date. Pro: If you can get the timing right, you will ideally end up buying your new home around the same time you close on the old. Con: Contracts are not always that smooth, and both deals could potentially fall through.

Talk to your real estate agent about the current housing market and see what your options are for timing the sale and purchase of a home.