"We may have outgrown this home" thanks to COVID
WFH (working-from-home) over the past however many months (we’ve lost count), has shown some of us our space is just not big enough. Whether it’s the fact you don’t have the dedicated workspace you want or require. Whether it’s that the kids don’t have a dedicated play area and you just can’t step on another piece of Lego. Or it’s the need for a Zen room before you kill your husband.. Over the past few months COVID has many Melbournians craving an upsize.
Here are a few things to consider.
Do you want to buy first and sell second or the other way around?
Our recommendation in the current market would be to sell first. You can then ask for a long settlement on that property, and in the meantime look for your new property. You will then know how much you have to play with for the next purchase. In the event you don’t find a property to buy before you settle, you can move into a rental for a short period. Whilst we understand packing and unpacking is not ideal, it’s not our recommendation to rush purchases because you are under time pressure. In reality, there are fewer properties available for purchase right now, so this may mean it takes a little longer to find your new home.
The key to this strategy is to be flexible on your settlement when you sell your current property, and open to the idea you may have to rent for a few months. In this scenario, we often get asked about lease break penalties. If you move into a 12-month rental and you want to break your lease because you have bought a new house, the penalties will differ between property management companies. Usually, you need to pay the advertising to re-lease the property and the rent until a new tenant moves in. In our opinion, it is costlier to buy the wrong property because you rush the decision.
Do we want to hold on to our current property and lease it out?
If this is something you are keen to explore, in the current market please be conservative with the rental estimate you put into your financial calculations. The rental market in Melbourne over the past few months has definitely softened, you may find it takes a little longer to find a suitable tenant. You may also find you get a little less on your weekly rent than you would have say 6 months ago.
The current market conditions
Despite the ‘plummeting real estate prices’ narrative that the media love to spruik, this is not what we are experiencing. However, let’s be cynical and say property prices in Melbourne have dropped 10%. Here is some basic maths to consider; If your current property is worth $1m, and the new property you are looking to buy is worth around $2m. You will sell your $1m property for $900k, but buy your $2m property for $1.8m, meaning you are in fact $100k in front on the upsize.
So if the C-word has you re-evaluating your current home and thinking it might be time to upsize, feel free to give us a call and we can chat through a plan of attack. From helping you sell to helping you buy, removalist coordinating, storage options, mortgage broker contacts and loads more, we make sure the process is as seamless as possible.
Stay positive Melbourne.
Tabitha