If you are considering looking for a new house, and are a current home-owner, then chances are you’re wondering what your strategy should be: do you wait to find the perfect new home before you put your current home on the market, or do you sell first and then look around? You have a few options. Use the following as a guide to explore what might be the best move for you.

Sell First:

There are several benefits to selling your current house before searching for your next home. First of all, once you have sold your house, you will know precisely how much money you have to work with. With a concrete price range, you’ll be able to narrow the pool of houses before you begin looking, and negotiate accordingly. This will allow you to immediately make firm offers on houses that you are serious about purchasing. If you are comfortable, you can remove the "Subject to Finance" condition in your offer. This could provide further negotiating leverage as Sellers tend to give you more consideration to offers with fewer "Subject to" conditions. They realize you’re probably looking at other properties and will move on if your offer is rejected. Likewise, if you have already sold your house, you probably do have a wider opportunity to look around, negotiate, and find the best deal and fit for you and your family.

The flip side of this scenario, however, is that if you don’t find the right property before the closing date of the house you’ve already sold, you may have to look for temporary housing until you do find what you’re looking for. This is extremely preveleant in hot real estate markets.

So, before you opt to sell first, you should determine whether you have alternate, temporary options, in case you have to move from your house before you’ve found a new one. How would you and your family deal with living in a transition home for an undetermined period of time?

Buy First:

Buying a new home without having sold your current home occurs all the time in the real estate market. There are pros and cons to buying first and much of that depends on how active the housing market is, the property you currently own and the type of property you intend to buy. I always have full discussions with my clients as to the pros and cons of the "Buy First" approach. I ensure there is an understanding of potential outcomes and we work together to create a strategy that works best.

If you buy another property and aren’t able to sell your current home quickly enough, you could end up having to finance both homes and shoulder the extra debt until you sell. You can get a financial appraisal or market evaluation of a home prior to selling, but this doesn’t guarantee the price you’ll ultimately receive for the home after the negotiation process has run its course. Since your selling price will be an unknown, jumping into a purchase could be a gamble, particularly if your budget is tight.

Make sure you’re familiar with all aspects of the financial reality this scenario would create before you purchase another home. You may be faced with owning two homes at once. What type of financial stress would this bring to your life and how would you deal with it? Consider the fact that if your current house doesn’t sell quickly enough, you may be forced to sell it off at a reduced price in order align the closing dates of your two properties. What effect would this have on your financial situation?

"Subject to Sale" Offer:

An additional option involves making your offer to purchase subject to the sale of your current property within a specified period. Subject offers usually include a clause that allows for the Sellers to keep their property on the market and remain open to other offers while you try to sell your home. If the Sellers receive another attractive offer before you’ve sold your home, they may accept and ask you to either remove your condition and firm up your offer, or to back down from the offer. A "Subject to Sale" offer forms a kind of middle ground, an area of compromise, for those who are afraid to sell or buy first—but doesn’t hold the advantages of the other two options.

One of the drawbacks of the "Subject to Sale" offer is that Sellers tend to take them less seriously. They definitely give stronger consideration to firm offers. This leaves you with less negotiating power. In fact, some Sellers will simply turn down or counter a "Subject to Sale" offer. Other Sellers will believe the Buyer will come back with a more serious offer when their home has sold. So, you may end up having to increase your offer in order to have your "Subject to Sale" offer accepted and keep your foot in the door of your desired house.

Even if your "Subject to Sale" offer is accepted, there is no guarantee another Buyer won’t step in and overthrow your offer before you have sold your current home, which would put you back at the starting line. Also, consider the fact that you cannot withdraw your "Subject to Sale" offer until the end of the period specified in the contract—which means that if a better deal comes along, you will have to wait to jump at it.