When my wife and I went house
hunting this past March, we
quickly found a place that was right for us.
The problem was, our current house wasn’t
ready to go on the market yet. We bought
the new home anyway, and endured five
weeks of stress before finally managing to
sell our old place.

If you’re looking to move, should you
follow our strategy, or play it safe, take the
conventional route, and first sell your
existing house?

Much of the answer depends upon
where you live. In our small town, only
about a dozen homes in our price range go
on the market at any time, and 90% of
them don’t fit our criteria. We knew that if
we sold first and gave ourselves a buying
deadline, we might well have to settle
for a ho-hum house. This made no sense,
since we were under no economic
pressure to move.

Buying first can also be a smart move
in a seller’s market where bidding wars
make it impossible to predict whether
you’ll be able to buy the place you want,
even at full asking price. Gabriel and
Nancy Chang took their agent’s controversial
advice and bought their new house in
midtown Toronto before listing their condo.
“The buying process could have dragged
on forever,” says Gabriel. The Changs had
two offers rejected during their search,
including one that was a staggering
$75,000 over asking price. “A couple of
our friends took six or seven months to
buy. One made 20 offers before having
one accepted.”

Going the traditional route and selling
your existing house first makes most
sense if you’re operating without much of
a financial safety net. In that case, if you
can’t sell your current home before your
new deal closes, you’re in a heap of
trouble. You will either have to carry two
mortgages or arrange expensive bridge
financing. “If you absolutely need to get
$300,000 or you won’t be able to afford
your new house, then you definitely want
to sell first,” says Graham Reid of Coldwell
Banker Terrequity Realty in Toronto.

Selling first also makes sense in a slow
market or if there’s something unusual
about your home. “If you live in a cookiecutter
house, then you know what you’re
going to get when you sell,” Reid says. But
if the house is in exceptionally good or
poor condition, it may not be comparable
to others in the area. If it has an odd layout
that will appeal to a small number of
buyers, it may be equally hard to evaluate.
Since you won’t know how much you’ll get
for your old place, it will be impossible to
budget for your new home.