Whether you’re looking to upgrade or downsize your home, you’ll need to decide whether to buy or sell first. While this sounds like a simple choice, many people are concerned they won’t find the right place for a price that’s within their budget before their home settles. Let’s explore the option of selling before buying your next home.
What Does Selling Before Buying Mean
Selling before buying means putting your home on the market before you’ve bought a new home. According to CoreLogic RPData, selling before buying is a popular strategy taken by homeowners as it represents the least amount of risk. Therefore, if you’re looking to go down a similar path, and sell in the least amount of time, you need to plan well. Your plan should include:
- Preparing your home well for sale – By spending time on your property and making it look its best, you’ll often get the price you want. Plus, you’ll attract more interest to your home with the possibility of more than one party showing interest in your home.
- Organising your time wisely– If you’ve got several weeks before your home is going on the market, then make the most of this by making a list of everything you need to do. Set yourself deadlines to achieve goals and stick to these, so you’re prepared for sale.
- Researching the market – Don’t just rely on a real estate agent to give you a price guide for your home. Instead, look at the market yourself. Go to open inspections and compare other homes to yours. Then consider what price you’d value your home at based on other sales – review data that are no older than 6-months.
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What are the Pros and Cons of Selling Before Buying?
As with any real estate action taken, selling before buying has it’s good and not-so-good points. So, before making a move to sell your home, you need to consider both the positive and negative aspects as they will enable you to make an informed decision.
The Pros of Selling First
- A deposit is available for your next home.
- Finances won’t be strained, which will alleviate stress.
- You can wait to get the price you want.
- You’ll pay less in interest.
Cons of Selling First
- Buying that dream home may be missed.
- Renting might be on the cards if you can’t find a home you like.
- Moving twice might be unavoidable, costing you more.
- Finding a home you like may take you months, even years.
Is Selling Before Buying for Me?
Selling first means that you’ll need to watch the market carefully. Also, it’s important to determine whether it’s a buyer’s or seller’s market. If it’s a buyer’s market, then sell your home before buying. Why? Well, property demand is higher, and you’ll fetch a higher price. Other reasons why you’d chose to sell first are when you:
- Have little or no equity in your home.
- Think it will take time to sell your property.
- Don’t want added financial stress.
- Receive a low income.
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What’s a Simultaneous Settlement?
Simultaneous settlement occurs when the sale of your old home and the purchase of your new home get arranged at the same time. While this is difficult to achieve, it is possible. So, what are the pros and cons of simultaneous settlement when selling before buying:
- The process is both fast and efficient.
- You’ll have time to plan your move.
- Your costs are less.
- You’ll feel less stressed.
- You can budget more effectively.
- You’ll know exactly how much you can spend on a new home.
- Settlement can get delayed.
- The settlements rely on each other.
- Should minor problems occur, then move rescheduling may happen.
- There’s a risk of losing your deposit.
How Do I Settle Simultaneously?
If you’re looking to settle simultaneously, then ask for a long settlement on the home you’re seeking to sell. By asking for a long settlement, you will give yourself time to organise the purchase of your new home. You can even ask for the addition of a clause in the contract stating settlement is adjustable with 4-weeks’ notice. Thus, this addition then gives you time to search for a new property and to arrange for settlement on the same day.
To make a simultaneous settlement possible you’ll need be willing to compromise. Therefore, you may have to offer a buyer of your property a more attractive deal, which may mean accepting a lower home price. On the other hand, you may also find that you’ll have to pay a little more for the home you’re buying.
While difficult to orchestrate, a simultaneous settlement is a real possibility if you have impeccable organisation skills. Of course, there are positives and negatives associated, these are as follows:
Pros of Settling Simultaneously
- You’ll only need to move once.
- Reduces costs.
- Less financial risk.
- Minimal disruption to daily life.
Cons of Settling Simultaneously
- Hard to organise.
- Arrangement needs excellent orchestration.
- Negotiation skills need to be impeccable.
- It’s essential to have a good team backing you – mortgage broker, conveyancer and real estate agent.