Many people who already own a home, and are looking to buy another one, may have a difficult decision to make, especially if they need to sell their current property. There are some advantages and disadvantages to consider either way.
Some experts say that it is better if you sell your current home first, while others are more inclined to suggest that you locate and make an offer on your new home first.
The biggest advantage of buying a new home first is that you will be able to shop for your dream home leisurely and deliberately over a time frame that is of your choosing.
If you have the extra money, and can afford to pay two mortgage payments if your current home doesn't sell quickly, buying another home before selling your current home first may be an option for you, but most people don't have that kind of income or money laying around
The big problem is that you could locate your dream home and then not be able to sell your current home fast enough to make the deal work.
The biggest advantage of selling your home first is that you will know exactly how much equity you have and how much of it you will have on hand to purchase your new home.
On the other hand, if you sell your home first, you may be put into a position where you may have to buy a home quickly, and that home may not meet all your needs.
If you do sell, and must vacate your current home before you close escrow on your new home, you will have to find yourself a place to live and to store your furniture and other belongings, until you can find another home.
You may not be able to sell your current home, or you may not be able to sell it for the amount you need as a down payment for your new home.
At any rate, you may have to include a clause in the purchase contract of your new home stating that the purchase and close of escrow is "subject-to-the-sale-of-your-current home." Some seller's will not accept a subject-to clause, or they may want an increased deposit.
When selling your home to buy another one, there should always be a subject-to clause if you have not located your new home. This will allow you some protection if you can't locate a new home.