Which Comes First: Selling Your Home or Buying a New One?
To buy or to sell first, which is the best option?
Selling before buying makes the most sense for people who are selling in a buyers’ market because you know your current home may take longer to sell, and you probably don’t want to cover the bond for two homes over an extended period of time..
It’s the age old debate; do you sell first and then look for a property to buy, or do you buy first and then hope to sell your property quickly?
There are pros and cons to consider for each option.
Why sell your house first?
Selling your house before buying a new one is the more practical solution for most people, but it’s not always the most convenient. Selling first is beneficial if you need to access your current home equity to buy your new home. However, selling first often requires temporary housing while buying your new house.
From a real estate market standpoint, selling before buying makes the most sense for people who are selling in a buyers market. In this situation, you know the your current home may take longer to sell, and you probably don’t want to or can’t afford to pay for two homes for an extended period of time.
1. Avoid a rushed home sale
Selling first gives you the luxury of time. You can wait until you get an offer you’re satisfied with, without the pressure of knowing you already bought (or are in the process of buying) a new house.
2. Make a stronger purchase offer
If you’re buying in a sellers' market, making an offer contingent upon your own house selling might make your offer less desirable or competitive.
3. Know your sale profit
By selling your current home before you buy, you have the actual cash from your sale to apply to your next purchase. It’s difficult to estimate your earnings before closing because sellers often make concessions. When you know your profit, you can adjust your affordability and shop within budget.
4. Pay only one bond
Paying the mortgage on two homes can cause financial strain. At the very least, having an existing bond can make it hard to qualify for your new bond, as your monthly payment factors into your debt-to-income ratio.
5. Stage your own home
With your belongings (or pared-down belongings) in place, you probably won’t need to hire a full-service stager to get your home ready for listing. Of course, you’ll still need to tidy up and declutter to showcase your home in its best light.
Why not buy first?
Buying a house without selling yours first isn’t for everyone, even if you can afford it. After all, nobody wants to foot the bill for two homes any longer than necessary. Depending on market conditions, it could take months before you’re able to sell.
Rushed home sale
When you’re making two bond payments each month, you might feel a sense of urgency to get your first home sold.
Financial strain of two bonds
For many people, it doesn’t make financial sense to own two homes at once. You may need cash available for your down payment or to cover out-of-pocket expenses like moving and staging. And you’ll need a strong debt-to-income ratio to qualify for your new bond.
Tips
Get bridging finance to unlock emergency funds: If you find yourself unable to close the deal on your new home, even though you have successfully sold your old home, then bridging finance might just be the short-term finance solution for you. Bridging finance is a type of loan you get on money that is due to be paid to you soon.
Work with a top agent: Expert estate agents work with property transactions almost every day of their existence. They understand the complicated process around real estate transactions and a good agent will guide you through the entire process. Another upside to using a reputable estate agent is that they can give you solid recommendations for other cogs in the process...
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