Buy or Sell First? What To Keep in Mind
Posted by Niels Madsen on
When it comes to property timing is everything, not just in terms of the market, or picking the right time for you to make your move, but in terms of making sure you have the easiest transition possible between your old and new homes.
One of the most important decisions any homeowner has to make is whether they want to sell their old home before or after purchasing their new one.
Truthfully there is no one right or wrong answer, it’s a matter of understanding your situation, and finding the right path for you. Which is why we’ve laid out some of the benefits and drawbacks of each approach when it comes to whether you should buy or sell first when moving to a new home.
Advantages Of Selling Your Property Before You Buy
One of the biggest benefits of selling your property before you buy is that you’re able to approach purchasing your next home from a position of strength and security. This will give you a helping hand when it comes to convincing buyers, as they will almost certainly prefer to sell to someone they know will be able and willing to follow through with the sale.
It means you’ll be selling from a position of strength, as if you purchase before selling then you may have to settle for a price less than the maximum return simply because you’ll need to bring the funds in as quickly as possible.
There’s also the advantage of being able to comprehensively budget and plan out. When your budget is dependent on the price you’ll be able to net for your current property, it’s advantageous not to have to guess at a range. Being able to know exactly how much you can spend means getting the best home for your budget.
Disadvantages Of Selling Your Property Before You Buy
There is one significant disadvantage to selling your property first, and that’s that you will be entirely dependent on not only finding your new home as quickly as possible, but in that purchase going through in time for you to move. If the dates don’t sync up, then you will be left needing to find alternative accommodation. This can often mean renting at short notice, which can prove stressful and expensive.
There’s also the matter of what to do with your belongings, if your temporary accommodation is unfurnished then you’ll still wind up paying double the moving costs. And if it isn’t, you’re going to need to spend additional funds on storage while you wait to move into your new home.
In addition to these costs, you will feel this time pressure in your decision making. With a definite leave date but no definite new house date, you may need to move sooner than you would like, something that can mean missing out on the home you really want, or having to settle for a more expensive price due to the market favouring sellers.
Advantages Of Buying Your Next Property Before You Sell
One of the biggest benefits to this approach is as much psychological and emotional as it is practical: if you buy first then your new property is there for you to move into as soon as you like. No waiting, no difficult limbo period, and no wondering about where exactly you’ll end up.
Beyond the piece of mind this provides you, there’s also an ability to start planning. If you buy first, then you can start thinking about everything from schools and work to decorating choices and getting to know the neighbours. In short, it lets you get started on thinking about all the important next steps, as well as all the exciting ones.
This is something that also applies to your search itself, without the added time pressure of the chain. You're able to view as many options as you want, narrowing down your criteria, and finding the perfect property for you.
Another advantage is that you're able to take advantage of opportunities that are presented to you. Whether that’s a market that favours buyers, finding that once in a lifetime dream home, or even being able to take a new job in a different city, buying first allows you to make a decision more in line with your personal timescale, rather than being pushed out from a sale.
Disadvantages Of Buying Your Home Before You Sell
It will come as no surprise that the biggest drawback to opting to go down the purchase before selling route is the financial risk and burden you’ll be assuming, as you will need to be able to raise the appropriate capital without being able to draw on the funds from the sale.
This will often mean having to take on bridging finance, an extra risk as well as something that will create further repayments for you to make in the future. Additionally, you may wind up owning two properties simultaneously, and that means paying all the associated fees, such as mortgage payments, property taxes, even utilities, for both homes.
There is also an increased risk that selling might be a longer process than envisioned. Houses can take a while to be ready for the property market, and finding the right buyer quickly is not guaranteed. Don’t be pressured to sell to the first offer simply because any sale is needed to move forward.
No matter which path you choose, and whether you’re looking to make the most of your opportunities as a buyer or a seller, there’s one constant—the need for expert advice from realtors who can deliver results for you. That’s exactly what we provide for all of our clients, so to find out more about how we can help you on your property journey, get in touch with us today.