So what's the best way to go about it? Is it better to find your dream home before you put your existing home on the market or should you prepare your home for sale and then start house-hunting?
The answer to this question depends on a few variables and will be effected by a person's financial position, the housing market in the areas you are buying and selling and also by how flexible you are willing to be in terms of renting or living with family if you find yourself between homes.
What's the housing market in the areas you are buying and selling in?
In a booming housing market the auction clearance rates can be up around the 90% mark. But when things slow down it might take several months for a property to sell, or even longer.
So first of all you should get a strong sense of what is happening in the area you are selling: what is a realistic estimate of how long it might take you to sell? Do your own research on the area in addition to consulting a couple of local real estate agents (just in case they have an overly optimistic viewpoint on this question).
The state of a housing market will also affect your ability to negotiate for the sale of your new home. In a buyer's market, when house sales have slowed down, you will have a greater ability to negotiate the terms of the contract settlement. In many cases, the buyer can choose whether to settle in 30, 60 or 90 days, however, you might be able to extend this to a longer period if you find your dream home but need more time to sell your place.
If the housing market is moving fast, it can work in your favour for private sales if you can settle in a shorter period, such as 30 days, so this is another thing to keep in mind that you could improve your bargaining power if you've already sold your home and you're ready to go.
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What's your financial position?
Are you moving to a larger home and absolutely can't afford your new home without clearing your existing mortgage? Or are you downsizing to a more affordable place, giving you a little more room to move?
If you have some wriggle room, then maybe it will work best for you to find exactly the home you're after before you put your own place on the market.
If you're under a bit of financial pressure, it might feel really stressful for you if you buy a new place but then have trouble selling your old home. It depends on your level of risk tolerance and how much of a financial buffer you have in place.
However, even if you do need the finance from your existing home, you won't be completely stuck if you buy a new place before you sell your home. There is bridging finance available to cover you for this type of scenario, which is usually offered at a competitive rate for the first 12 months of the bridging finance loan. However, some bridging loans can become very expensive after this time period has expired so it's important to know what you're signing up for.
How flexible can you be?
If you'd prefer to keep the transaction low-stress, then it might suit you to sell your place before you buy the new one and try and have a long settlement term on your contract of sale to give you time to find the new abode.
However, buying your home is a massive purchase, so the last thing you want to do is feel rushed into a decision or make a huge unnecessary compromise, so it's worth looking into the options to give you some time. Would you be happy to rent a place for three to six months, or maybe even a year (if you do this, make sure you know what the terms of the lease agreement are if you break the lease or sublease – you don't want this to be too expensive if you find your new home quickly). Or do you have friends or family you can stay with for the crossover period without causing too much stress on these relationships?
Whatever you do, expected the unexpected
Moving home has been listed in the top five of life's most stressful experiences, so it's good to be mindful that whatever option you choose you are likely to experience moments of stress or discomfort. The best approach is to sit down and work out all the options and consider what you would do if things didn't work out as planned. Once you have your backup plans in place and feel comfortable with the level of stress they might cause – then you can proceed with confidence knowing things will be fine no matter what fate, luck and some good hard research decide for you.
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