Buying and Selling Homes at the Same Time

We all have our reasons for moving home, be it upsizing, downsizing, moving to a better suburb or relocating for work. What is important is that you do not rush or have to lower your position on either the purchase or sell as this could lose you tens of thousands.

We all have our reasons for moving home, be it upsizing, downsizing, moving to a better suburb or relocating for work. What is important is that you do not rush or have to lower your position on either the purchase or sell as this could lose you tens of thousands.

With the deadlines, paperwork, due diligence to be done, finance solutions and property research required, buying and selling homes is not the easiest thing to do. I have known some people to become so intimidated by the process that they sell and pull out of the property market altogether and rent for six months. This is all well and good if you are able to take your time and pick up a good deal but it is not if you are in a market where prices keep creeping up and having to relocate twice is also stressful.

Work out if you need to buy or sell first

Buying first and selling first each have their own pros and cons and it is generally considered more favourable to sell first in a buyer's market, and buy first in a seller's market.

1.This is done through research. These days it is very easy to obtain property sales information online through free and paid for resources and I recommend you spend several weeks researching similar properties on both sides. For the appraisal of your own home use several real estate agents whose appraisal reports should contain 6-8 comparable property sales to back up their estimated sale price.

2.It is likely to take longer to sell in a buyer's market due to there being more stock on the market and you potentially having to negotiate your price down.

3.Selling first reduces the possibility of paying two mortgages at the same time as well as making obtaining a new mortgage easier. Although both can be catered for in most situations under a good 'relocation loan'. Selling first also gives you more exact figures on how much money you have to work with on the purchase.

4.Buying first in a seller's market reduces the stress of waiting to find a new property after you are contracted to sell your own. You are still faced with the possibility of having to pay two mortgages at the same time but the chances are that if prepared and marketed correctly, your home will sell quicker than it will take you to buy as there will be more competition on the buying side.

In an ideal world, all settlement dates will be same day and simultaneous. Coordinate the settlement dates as close as you can but if there is a sizeable gap between selling and buying there are several options available to ease the process.

If you buy first you could add a contingency into the contract to make the purchase dependent upon the sale of your home. Be prepared to extoll the virtues of your home and why it will sell quickly if this is the case.

One route less travelled is to rent your current home off the new buyer for a couple of months after they have settled. This would involve either a reduced purchase price or a rental payment.

You have to be decisive and quick to take action but it is important that you do not rush. I have come across many people who paid too much for their new home or were devastated to lose out on their 'dream home' only to find a better property weeks later. Do not let the above aspects leave you out of pocket. You should always be thinking of two key principles: get as good a price as possible for you current home, and buy the new house as cheaply as possible.

Want to talk it over with one of our team?

Acknowledgements

https://www.localagentfinder.com.au/blog/buyers-versus-sellers-property-markets/

http://www.realtor.com/advice/buy/buying-a-house-while-selling-a-house/