Unless you’re buying your very first home, at some point you will need to unravel the complicated process of selling and buying a home simultaneously. Moving homes is pretty much inevitable in your life as a homeowner. Eventually you’ll need to upgrade, downgrade or relocate as your life changes and your family expands or leaves the nest.
When selling and buying a home, most home owners are looking to get the highest possible price for their current home while at the same time purchasing a new one at the best price possible.
While there is no right or wrong way of selling and buying a home, there are certain pitfalls you want to avoid to ensure things go your way.
Finance is usually the main consideration for most homeowners and can become tricky if you’re not well prepared. However, the more educated you are about the process, the better the chances are that you will be able to change homes without losing too much sleep!
Scenario 1: Selling Your Home First
When selling and buying a home, the logical way to do things is to sell your home first. That way, you’ll know just how much you have to spend.
When buying before selling, homeowners have a tendency to overestimate what their home is worth, which leaves them in a sticky position, so selling first can mitigate these risks.
The tricky part is finding a new home that you love once you’ve already sold your home. It may take time to find the perfect home, which may leave you having to move twice, renting while you look for a home you love. This can be very stressful, particularly if you’re packing up and moving a large family.
Plus, the longer the gap is between buying and selling, the harder it will be to find a home within you budget that ticks all the boxes, if prices are increasing quickly in your chosen area.
If you believe you can sell your home quickly, be prepared to buy and, once your home is on the market or close to sale, be sure to scour the market for new homes quickly.
Scenario 2: Buying a New Home First
Buying before selling isn’t always ideal, but what if you find your dream before you sell your existing home? Ideally, you don’t want to miss out, especially if you’ve already been looking for a long time and feel it’s a great opportunity.
Choosing to buy first offers many advantages; you can search for a home and make offers without rushing, or offer settlement terms that suit both of you. Not having that desperation to purchase in a rush leaves you in a better position to negotiate. Purchasing sooner, particularly when the market is in your favour, can also mean you can take advantage of capital growth in the area.
However, on the flip side, buying before selling your home can leave you in a poor financial position and leave you more likely to have to accept a lower offer or agree to unfavourable terms when selling. That’s provided your lender actually agrees to fund you for a second home without having sold the first. You need to have a strong grasp of the financial implications of buying before selling and speak to your bank, your accountant and your real estate agent before making any big decisions.
Of course, if you already own your home outright, you can confidently buy without having to worry as much about holding both properties at once.
Scenario 3: Selling and buying a home at the same time.
If you’re lucky enough to find yourself selling and buying a home at the same time, we salute you! This is a great position to be in, and could even mean you can take your loan with you, if you can arrange the transition to occur on the same day.
To find out more about how to sell your home and buy a new one, browse our blogs for more advice. Or, speak to one of our expert team members who can help you navigate the muddy waters of selling and buying a home. Contact us here.