Let’s say a person has a house they are currently living in and they need, or want, to purchase a new home and live there… maybe they’re looking to move up or downsize, maybe they’re changing school districts, or maybe they are moving to a new city.

Naturally, this is a situation that comes up often in real estate. Clients always ask “Should I sell my current home before purchasing another? Is it better to sell after or should I buy and sell at the same time?

I always advise my clients that if they are financially in a position to do so, separate both the purchase and sale transactions. The idea is to avoid concurrent transactions, 2 transactions at the same time. This will avoid all sorts of headaches, pitfalls, problems. It isn’t worth the risk if it isn’t necessary.

In my experience, your finances will play a large role in determining whether to sell first, sell after, or sell at the same time. If you don’t need the money from the equity in your present home to buy another, especially if you are paying cash, don’t sell your current home first.

If you’re in a position where you do need the money from your current home to buy a new one, then sell your current home first. If you can sell your home and find a short term rental or somewhere to live while you look for your new home you will take a whole lot of the pressure off the process. This is still a much better option than having to buy and sell at the same time and have one transaction be contingent on the other.

We want to find the best scenario to relieve as much pressure as possible. This will dramatically increase our opportunity for successful transactions. Sellers who aren't under pressure to sell often obtain higher sales prices because buyers realize the sellers are not desperate.

Regardless of your situation, you may need some type of loan to purchase your new home. If this is the case you definitely need to speak to a lender first so they can walk you through what your options are; such as a bridge loan, leasing the home, pulling the equity out of your current home, or possibly even qualifying for a loan on the new hoe without the equity of your current home. Getting clarity from your lender is a top priority in this process!

If you absolutely must buy and sell at the same time, you’re really going to need to plan carefully. If you aren’t careful, and there isn’t a whole lot of communication between both escrows, your hands can really get tied. One escrow transaction can involve over 20 individuals, including real estate professionals, buyer, seller, attorney, escrow officer, escrow technician, title officer, loan officer, loan processor, loan underwriter, home inspector, termite inspector, insurance agent, home warranty representative, contractor, roofer, plumber, pool service, and so on. Often times if one transaction starts to go sideways, chances are the other one is right behind it. There are a whole lot of moving parts. Naturally if one transaction depends on another it doesn’t take a lot to derail it.

As the seller of your current home, you could get caught in a desperate situation and take a bad offer, because you feel pressured, just to get the money so the purchase goes through on your new home.

As the buyer, in this competitive market we’re currently in, your offer isn’t going to look nearly as desirable when its contingent on the sale of your current home. By making the sale of your home contingent on closing concurrently with your new purchase, you have basically said to the buyer, "If I can't find the home I want to buy, I'm under no obligation to sell to you.” I know if I’m the buyer, that’s not exactly what I want to hear from my seller!

When it comes to buying and selling at the same time, if you’re financially in a position to do so, separate both the purchase and sale transactions from one another. If you don’t need the money from your current home to buy the new home, don’t sell first. It will relieve a whole lot of pressure. Most importantly, be sure to consult with both your lender and your realtor before deciding on a plan of action.