“Should I buy or sell my house first?”
You’ve decided to move and you keep asking this question over and over.
It can be a tough call. Buying first and selling first both have pros and cons. What you ultimately decide to do will be based on your particular situation and financial picture.
Every homeowner would love to sell their home and move directly into their new one without fuss.
Unfortunately though, that’s not always possible. Things happen.
And real estate transactions involve paperwork and sometimes, unfortunately, can move slowly.
For many, selling first makes the most sense.
It minimises financial risk by providing you with the basis for what you can afford to purchase and relieves you of the pressure of having to accept a lower price to get out from under having two mortgages.
In addition, selling your home first gives you time to work with your agent to develop the best marketing strategy and list your home in ways geared towards getting you the highest price, including options like minor repairs and renovations.
If you don’t find a new home before the sale closing date, you and your family may need to move into temporary housing such as an apartment or hotel.
This is never fun.
It can be uncomfortable and means having to move twice, whilst possibly putting some of your belongings in storage. These costs can add up quickly.
If the buyer and agents involved are willing, you may be able to mitigate this risk by asking for an extended settlement.
If you don’t have financial constraints and don’t want to deal with interim housing, buying your next home before selling your current one can be the way to go.
The biggest advantage to buying your home first is that you’ll be able to move without the pressure of new owners waiting to move into your old home. You can take time to pack and say goodbye (maybe with one final dinner party?) to without a time constraint.
In addition, buying first means you can avoid temporary housing and can stage the home properly to try and obtain an optimal sales price. As an aside, we’ve written a short guide on home staging, which you can download here (free).
And, because you’re not living there, it’s often easier for agents to arrange open houses. They don’t have to worry about working around your schedule and can cater to the potential buyers’ wishes.
The cons associated with buying first are mostly financial in nature.
First, you’ll have to pay two mortgages and property taxes on two properties.
In addition, you’ll have to put down the deposit on your new home without having money from the sale of your old home to draw upon.
Finally, there’s no guarantee that when your old home finally sells, it will cover the expected costs.
Although these negatives can be mitigated – for example, by renting out your old home, there is no guarantee they will completely alleviate the financial pinch.
Therefore, buying a new home first is an option usually reserved for those in the financial position to take on those risks.
A possible third option…
“Should I buy or sell my house first?”
Well, there’s a possible third answer.
If neither of these sound ideal to you, you and your agent may want to consider a conditional offer.
A conditional offer means that you and the seller of your new home agree that you’ll finalise the purchase in a certain time frame only if you sell your current home.
But be aware: the seller is allowed to take additional offers during this period, so there is a risk you could lose out, but if all parties are agreeable, this could be the best choice.
So, should I buy or sell my house first? What’s the answer?
It depends on you! It’s an easy answer, we know – but it really does.
Buying and selling a home can be stressful – but also exciting. When considering what logistically makes the most sense for you and your family, your financial picture is the most important factor.
Whatever you decide, enjoy your new home!
If you are thinking of selling, we’ve written a guide to help you get your Sydney home ready for sale. Click here to download your copy (free)