To sell first, or buy first?
So you're ready to move. You already own a property and you’re looking to up/down size into the next one. The most common question we get with clients in this position is, ‘Should I buy or sell first?’
There are three main factors at play here.
What is the market doing? Is it a sellers market or a buyers market?
What is your risk appetite? If you sell your home and haven’t found a new one, how will you feel? Or if you buy a new property and don't know what your current one will sell for or IF it will sell within your ideal time frame, how will you feel?
What is your financial position? Do you need the funds from your current property to purchase and settle on the next one? Do you have a 10% deposit available without selling your home?
These are all things we can't answer for you, but we do help clients come to a conclusion by asking the right questions and working out what’s going to be best for them and their family.
An important point to consider is the settlement period - what is your ideal settlement period? Usually the longer the better so you have the opportunity to sell or buy within that time and possibly even settle on the same day. If you’re unable to settle on the same day have you discussed bridging finance and associated costs with your lender?
Let’s have a look at some of the pros and cons for each….
If you SELL first
You’ll know EXACTLY what you can spend on the next purchase
You will have funds available for your next purchase, as you can get early release of the buyers deposit from your home.
You may not find something to buy before settlement.. In which case, you may need to stay with family / friends or in a short term rental. This will result in multiple moves, costs and potential headaches.
You may be able to set the settlement period you want.. Be aware, when you’re selling, it is best to be as flexible as possible on settlement to attract the most amount of buyers.
If you BUY first
You will know with certainty that you have found your next dream home and can happily move through the selling process.
Lack of stock can make it difficult to find the right property so if you have a tight scope for your next purchase, it can be best to ensure you’ve found the right property first.
If you aren’t able to sell prior to settlement on your new property you will likely need to arrange bridging finance which can be expensive and needs to be cleared with your lender before committing to anything.
There may be fluctuations in the market between the time you purchase and the time you sell. If the market shifts and you need to sell for a lesser price than hoped, you need to ensure you have a buffer zone and can cover any shortfall.
If you are unable to sell your existing property for any reason, is it a viable option to lease it out instead?
As with almost everything in real estate, it’s not an exact science and up to the individual to work out what is going to be most suitable for them. What we suggest you do, is book a chat with us so we can go through the different scenarios together and work out what’s best for you. Don’t forget, we get access to more properties than the average buyer, so you’ll also put yourself in the best possible position to buy the perfect home for your next chapter!
Tabitha