Buying Before Selling - Should you buy before you sell?

Updates from Cox Partners Estate Agents

Home sellers are often confronted by the anxious question. What if they sell quickly and have nowhere to live?

In the past, moving home went like this:

a. Find another home you love;
b. Buy that home, subject to sale of your existing property or by using bridging finance; then
c. Sell your current property.

However this process, more than any other, can result in home sellers experiencing significant financial loss.

Agents, on the other hand, love it; they get a truly motivated seller. Banks love it; they get to keep a client and get double the interest until the property sells.

But properties sometimes don’t sell as quickly as expected or for the price required. The financial loss can be hard and fast, or so subtle that the seller doesn’t realise what’s happened.

Most commonly this is what occurs:

a. Concerned about being homeless, you begin searching for properties to buy, and find the perfect home. The dream of the new home plus a fear of missing out encourages you to pay a premium price when purchasing.
b. You then ask the same agent to price your current home. If this agent over-estimates the likely selling price, you could decide to move based on inflated figures.
c. You then arrange bridging finance.

If your property doesn’t sell at the inflated price, the financial and emotional pressure increases as time goes by.

If you end up selling your original home for less than expected and paying too much for your new home, you lose on both sides of the transaction.

Here is a much BETTER way to approach your move, and avoid this potential financial loss:

1. Find a buyer for your existing property.
Agree to price and terms with the buyer and include a short subject to purchase provision in your agreement. Most genuine buyers will agree to a reasonable wait period, especially if they love your property. You now have a firm budget with which to work, and a buyer is secured. This establishes a secure negotiating position for you to buy. More importantly, you are safe from the danger of overcommitting based on incorrect information.

2. Intensify your search for a new property.
People often find their perfect home within days of starting a serious search.

3. Consider the changeover cost.
Can your new home be purchased within your budget? Assess and arrange your finances at this point.

4. Purchase your new home.
Finally purchase your new property subject to the simultaneous settlement of the prior sale.

Don’t risk your financial security. This will only benefit others. Use a safe and proven strategy when selling. If you want more commonsense advice about selling and buying your home call us anytime on (06) 835-4321.