If you’re ready to move but struggling to decide whether to buy first or sell first, we get it. You need to sell your current home to fund the purchase of your next one. But the seller of your next home might be reluctant to wait for your current place to sell. This is especially true in popular locations, where sellers often receive multiple offers and are less inclined to accept a conditional offer reliant on a house sale. As a result, you find yourself in a sticky situation where you need cash to be competitive. Here are some practical tips to help you navigate this common conundrum.
Work out your budget
Before determining whether to buy or sell first, consult a real estate professional for an accurate assessment of your current home’s value. Regardless of your decision to buy or sell first, having a figure at your disposal streamlines the process! This proactive approach ensures you have a clear understanding of your budget for your next property purchase, eliminating the need to sell first to gauge your financial standing. A real estate agent or a professional valuer will be able to conduct a comparative analysis of recent sales in your area to provide a realistic estimate.
Determine whether it’s seller’s or buyer’s market
Seller’s Market
Homes tend to sell quickly when there are plenty of buyers but not plenty of properties. This is known as a “seller’s market.” In a seller’s market, there’s less risk associated with choosing to buy first because demand is strong. But be aware that sellers in a seller’s market are less likely to accept your offer if it’s conditional on the sale of your property, so you might end up owning two properties for a period of time – meaning double insurance, rates and mortgage repayments. Talk to a real estate professional about potential demand for your current home and how long it’ll take to sell. Buying first gives you the luxury of time, easing pressure when it comes to finding the right home. But while time is on your side, your finances might not be. At Moneybox, we can assist you in exploring mortgage options such as bridging finance to cover the gap between purchasing your new home and selling your current one. This option provides financial flexibility and ensures you won’t miss out on a fantastic opportunity when it comes along!
Buyer’s Market
On the flip side, you might opt to sell first in a “buyer’s market,” meaning you’ll become a cash buyer and will be in a much stronger position to buy as soon as you find what you want! Selling first enables precise budgeting for your next purchase. If property prices are falling, this can also work in your favour. You’ll be able to attract an interested buyer before prices drop further, leaving you free to purchase your next property at the lower end of the market cycle.
Be aware that as soon as you accept an offer, the countdown to settlement begins, potentially pressuring you into compromising on a less-than-ideal property. So, consider negotiating an extended settlement period for flexibility, and have a solid Plan B in place, whether it’s moving into a short-term rental, or staying with friends or family.
Get support and plan ahead
Planning is paramount when it comes to home buying and selling, helping you make the right decision for your personal goals and circumstances while factoring in market conditions. Planning ahead will ensure there’s enough time to research the market and area that you’re looking to buy in so you’re ready to buy when the right property comes along. Before making an offer, speak to your mortgage broker or lender so you have a clear idea of your finances and what you can borrow.
Both approaches—buying first or selling first—come with their own set of pros and cons. However, laying the groundwork before jumping in is crucial for minimising complications and stress along the way. Establishing a reliable team of qualified real estate and financial advice professionals will provide the necessary guidance at every stage of the process, ensuring a smooth transition to your next step on the real estate ladder. Get in touch to plan your next move today.