Should I buy or sell first is a common question for people contemplating a move. In an ideal world, we would buy our new house while selling our current one to ensure we can simply move from one property to another with a minimum of fuss. But here in Sydney, we are currently in a buyer’s market. What this means is that buying before you are sure of a sale can be risky. Are you wondering if you should buy a new house before selling your old one? Here are some things to bear in mind.
What are the benefits of selling your home first?
Selling first means you know — to the dollar — how much deposit you have towards your new home. Doing so also puts you in a slightly stronger position when negotiating. This is because you are a safer bet as a buyer than someone who is depending on the sale of their existing home to purchase a new one.
If you do choose to sell first, you can always ask for an extended settlement. This will ensure you don’t have to move more than once. Failing that, try to find a short-term rental or house-sit while you complete the purchase of your new home.
The downside to a short-term rental is that you’ll be moving and setting up twice. However, you can mitigate this to some extent by keeping most of your belongings in storage and moving into a short-stay furnished apartment rather than committing to a long lease.
If you’re moving to a new city or area, selling first and renting for a while can be a smart move as it allows you to scope out your new area before committing to a purchase.
What are the risks of buying before you sell?
The main risk of buying first is that your current property doesn’t sell in a timely manner. This may mean paying for a bridging loan on your new home, while continuing to pay the mortgage on your existing property. Plus you’ll be dealing with the uncertainty and stress of not knowing exactly how long your situation will go on for.
Another possibility is that you find your dream home before you sell. You may miss out, or feel forced to accept a lower price for your existing home in order to secure your new one.
The recent property boom in Sydney, along with relaxed lending by banks, made it easy for people to buy before they sold. Buyers would rush into a sale for fear of missing out as prices soared ever higher, knowing that their own property was likely to sell quickly in a heated market. We are now back to a more normal market, with tightened lending. This means that while you still need to act quickly to secure your preferred property, you can plan your approach.
Some final thoughts
Now is a great time to upgrade or buy an investment property for less than you would have even two years ago, should you wish. There are plenty of choices on the market and interest rates remain low. Having said that, it’s always worth seeking financial advice before making the decision to borrow more money.
As always, it’s worth talking to local agents, doing your own research into your preferred area, and committing time and energy to ensure a successful sale and purchase.
Talk to us
As a boutique agency specialising in the inner city of Sydney and the Hyde Park precinct, we are always happy to give prospective sellers some informed advice on planning their next property move. Talk to us if you are interested in an appraisal or up-to-date insights into local market conditions.