This is nearly always a bit of a juggling act.
However, there are definitely ways to optimise the process.
After 15 years and hundreds of property transactions in which either a buyer or a seller was making this kind of decision I believe I have a unique perspective on the pros and cons of the different options. I have noticed that the right answer is often not the intuitive one. It is therefore my hope that this article will be helpful for anyone considering a sale.
There are three main ways to go about this:
- Buy a home “conditionally” and then try and sell your home within the “conditional period”.
- Buy a home “unconditionally” and then sell your home – potentially owning both houses for a short time.
- Sell first and then buy your next home.
Some people favour the idea of finding a house and negotiating to buy it before selling theirs by inserting a clause allowing them to sell their own house before they have to commit to the deal. They then have to sell their own home within an agreed time-frame to complete both deals. There are certainly times when this can work.
However, if you are looking to buy a home that is in demand, then this won’t work. This is because agents and owners will quite rightly choose to negotiate with buyers who are not encumbered with a house to sell. This means the owner may be able to use your offer to obtain a higher price from the market but you still miss out on the home.
The next option is to buy a house unconditionally and then sell. This can definitely work if you can afford it. But I would not recommend it unless you are certain this will not cause you any emotional or financial stress. Banks provide “bridging finance” for this purpose, but for many people selling a home is stressful enough without having to worry about having a huge loan to the bank if you struggle to sell. For the lucky few who can drop cash on their next home, it can work.
Finally, you can sell your home first. Here there is always the possibility of having to move twice. The key is to negotiate the longest possible settlement/completion date (the date you hand over the keys to the new owner). This allows you ample time to find your next home and marry the two settlement dates up together. You also have the benefit of knowing exactly how much cash you have to spend because you have already sold. And you are far more likely to be able to get a better deal as a cash buyer.
In my experience people should not worry about finding their next home. Once you have sold you are usually ten times more active in your search – as your focus necessarily becomes greater – which means your opportunities actually rise and you soon find what you want.
I also think it is very important to remember that you can buy any house that is on the market, but you can only sell your house once. Your focus should first and foremost be on maximising your sale price. The reality is most people do get this right eventually.
We looked at our sales data for the last several years and found that less than 3% of offers were subject to sale of a house and the amount of those that were accepted was actually zero. We find that people usually get frustrated with missing out on homes and eventually decide to sell first anyway.
Please bear in mind that this article is necessarily general in nature and individual needs can be complex, so if you would like some specific professional advice (at no cost), including a free no obligation appraisal of your home’s value, feel free to call me any time on 027 777 1120.