Should I buy before I sell?

One question we often get asked by those looking to sell their home is: should I buy before I sell?  Ultimately, it is a decision that every homeowner will need to make based on their own unique circumstances but let’s review the advantages and disadvantages of each.

Buying before selling

For a buyer where obtaining finance isn’t a concern, the certainty of buying before selling can be a great advantage.  The buyer is able to set their own pace.  If they see something they just can’t live without, they can make an offer and reduce the risk of another buyer securing the property.  If the market is steady or rising, they could also save on their next home by locking in at today’s prices, and allowing their existing home to increase in value, while they prepare it for sale.

For buyers who are, perhaps, not so financially secure, the idea of buying before selling can be a daunting process.  What if their current house doesn’t sell?  Can they afford to potentially be paying two home loans, for a period of time?

Fortunately, there are some ways to minimise the chances of this happening, although it is important to keep in mind that these options may not always be attractive to the seller.  A buyer can negotiate a longer settlement (say from 30 to 90 days, allowing them more time to sell their existing house).  They can also make the purchase of their new home subject to finance (allowing additional time to secure a new loan for their purchase). For buyers who find themselves unable to sell their property, there is the option to rent out their old home in order to gain some rental income, and assist in paying the home loan.

Selling before buying

This is certainly the less risky of the two options.  By selling a property before buying, the seller is able to make a clean financial break between the two transactions.  This will offer more certainty around how much the seller can afford to put towards their next purchase.  By not having a deadline to work within, they are able to wait until the time is right for them.

It is possible for a seller to negotiate a longer settlement (as we referred to above) into the sale of their property, allowing them more time to be able to find their new home.  If they are lucky, they may find their new home with enough time to be able to move straight in.

If the seller is unable to find a new home before their old home settles, they may need to look at renting or staying with friends/family until they find their new home.  If moving to a new area, renting for a short time allows the buyer to get a feel for their new community, before making the decision on exactly where they’d like their new home to be.

 

No matter how you get there,  there’s no better feeling than sitting down, putting your feet up, and gazing around at the wonder that is your amazing new home.  Take a moment to pat yourself on the back for a job well done.

As your local property experts, we would be happy to have one of our agents advise you on making the process of transitioning between homes as smooth as possible.  Call the office today for a no-obligation chat about your property goals.