Knowing whether to buy or sell first is a difficult decision to make for most people. Then trying to coordinate them both to time perfectly can be a major juggling act and cause for much stress. We’d like to shed some light on the subject and hopefully assist your decision making process.
Buying First
Advantages:
- If it is a Seller’s market (ie more demand than supply can service), buying first may be a relatively safe option. At least you can be confident that your property should sell within a reasonable time frame.
- If you’ve found a property that ticks all the boxes, then buying first may be the only option to ensure you don’t miss out.
- When you buy first, you don’t have the stress of worrying about where you’re going to live after you’ve sold your home.
- If you can negotiate a longer settlement period, this will allow extra time for you to achieve the best price for your existing home.
Disadvantages:
- You’ve committed yourself to buying the property without knowing when or how much your own property will sell for.
- If your existing home doesn’t sell by the time the new property settles, then you will most likely need to take out bridging finance, which can be extremely costly.
- If you’ve based your spend for the new purchase on what you think or have been told your existing home should sell for, you might find yourself disappointed. Your existing home may not receive interest at your expected level, but you’ll need to sell the property anyway to meet your obligations under the new purchase, resulting in a larger financial liability.
- If you’re buying in a Seller’s market, you will most likely be paying more for your new home. However this amount is usually offset by the extra money you should be able to achieve for your existing home provided you sell in the same market.
Selling First
Advantages:
- When you sell first, you know exactly how much you are able to comfortably spend on the new purchase. This would have to be the biggest and most logical advantage for selling before you buy.
- You can buy with confidence knowing that the money is “in the bank”.
- You can include an extended settlement period of 12 or even 16 weeks in the Contract to allow you enough time to find your dream home.
- Depending on their circumstances, the purchaser of your home may consider a “leaseback” arrangement so that you can remain in the property after settlement takes place.
Disadvantages:
- You may not have found the right property by the time your home settles and have to consider alternative living arrangements .
- You may need to rent for 6 months whilst you continue your property search. This means additional moving costs, utility connections and depending on market conditions, you might find it difficult to get back into the market.
- The longer the time frame between selling and buying could mean that you get less value for your money if the market is on the rise.
With more than 25 years experience as a Licensed Real Estate agent, I have seen too many sellers forced into a heartbreaking position due to their decision to buy before they sell. If you’re reading this and find yourself in a similar position, we have one major piece of advice: make sure your selling agent does not disclose this fact to buyers. Once buyers know that you’ve committed to buy elsewhere, they automatically discount what they’re prepared to pay for your home. A situation you want to completely avoid!
If you’re really serious and can afford the time, selling when the market is high, then renting and buying when the market is low, is the ideal scenario. However not too many people can afford the luxury of doing it this way. It takes commitment to continually monitor the market and lots of patience, which simply does not fit the lifestyle of most people.
We always recommend to our clients it is a much safer option to sell before you buy. Start getting a feel for the market and the type of property you are looking to buy, and at the same time your own property should also be up for sale. If you find the right property you need to be in a position to move on it.
Innovative Property are specialist Property Advocates and assist with both the selling and buying process. We provide independent and unbiased advice, and deal directly with the real estate agents on your behalf to make the process more transparent and stress free. If you’d like to know our strategies for achieving the highest price on your sale (and how engaging our services won’t cost you anything extra), give us a call today on 0411 522 233.
