Unless you are in the lucky position of being the owner of multiple properties, it is very likely that you’ll have to sell your current home while also being a homebuyer at the same time. For many concurrent homebuyers and sellers, this is a very daunting process that might haunt their dreams at night.
On the one hand, there is the prospect of going through the stress of getting a property ready for the market and advertising it, while having to contend with prospective buyers coming to see the home in person. On the other hand there is the anxiety associated with packing in preparation of moving, while also having to search for a home to move to.
All of this may render simultaneous sellers and buyers unable to focus on either aspect, as both seem to require the same amount of commitment if either transaction is to be successful and profitable.
First off, this is your reminder that you don’t have to navigate the property market by yourself. A real estate agent that is qualified to operate in their city or suburb, and has also gained experience in said property market over a number of years is a great ally, and may, in fact, be indispensable if you are planning to sell and buy with the least possible amount of strain, stress and anxiety.
Real estate agents are experts at selling property, but also know how to find a home that meets all the requirements and needs that a property buyer has. The best thing of all? You needn’t get two different people to help you!
When searching for a real estate agent to help you buy and sell, it’s worth mentioning what price you are hoping to fetch on your current property in order to be able to also acquire another property. When your real estate agent understands your exact needs, they can start searching for a property that is in your chosen price class, while also maximising the profits on the home you’re currently living in.
Depending on your unique circumstances, there are a few ways to undertake this intricate process.
Why sell your house first?
When discussing your personal and financial circumstances with your real estate agent, they are most likely to recommend that you focus on selling your current property before acquiring another home.
There are benefits to making this decision; chiefly the fact that it will mean you won’t have to cover two home loan repayments at the same time. Because there is rarely any kind of guarantee of how long a property will spend on the market, it makes sense to first finalise this transaction, so you have the cash ready when you have to pay for a new home.
Choosing to sell your own property before buying a different one also means that there is less pressure on you to accept just any offer. When selling first, you will be able to spend a little more time getting the price you are looking for (this is even more true when a buyer’s market is in effect), ensuring that you can cover all the costs associated with the acquisition of a property, including the additional administrative costs that buyers often forget about.
Why not sell first?
It is important to note that the decision to sell your current property before buying another will come with a few caveats. Unless you are able to negotiate a later moving-in date with the people that are purchasing your property, you might have to find another home to stay in while looking for a new property to invest in.
In this regard, you may want to consider rental options. One option is to negotiate with the new owners of the house about staying on in their home for an additional month or two while finding a new home. If they are willing, you might be able to stay on and sort out the move without having to rush.
However, if the new owners of your home want to move in immediately, you might have to find another place to rent, while putting all your belongings in storage.
Many people who buy and sell at the same time find these things unnecessary expenses that they might not be able to cover, given their current financial position.
Why buy a house before selling?
The second option to talk over with your real estate agent is buying another property before your current home is actually sold. As you might expect, the financial implications of a decision like this are more significant than they would be if you sold the current property first. Buying another home means that you will indeed have to be able to finance two bonds at the same time – something that is, unfortunately, not a viable option for many homebuyers in the current economic climate, which has been heavily affected by the outbreak of the novel coronavirus.
If you do decide to buy a new house before your current property is sold, speak to your real estate agent about perhaps including a sale contingency in the contract. This entails that the offer you make on a property you are looking to buy is dependent on your own property selling first. Your real estate agent will handle negotiations in this regard on your behalf, but not all home sellers will be willing to agree to these terms.
Should this be the case, you may have to revert to getting a bridging loan to help you cover the cost of a new home, while still paying your current mortgage. This will prevent your having to spend all your savings before the current property is sold.
A third option, if you are planning to buy a new property, is to consider renting it while it is on the market. In this way, you are gaining an additional income stream to help you cover the cost of two bonds.
Why not buy first?
It goes without saying that undertaking additional financial expenses is the more strenuous option, creating pressure in addition to the constraints that home sellers and buyers are already faced with.
If there is no way that you are able to carry the financial burden of paying for two properties at once, buying a new home before selling your current property will not be an option for you.
Even if there are alternative routes that can save you a bit of cash – like including a sale contingency in the sales contract on your current home, renting the property while it is on the market, or getting a bridging loan to help you cover the additional costs – all of these options will require more money at the ready than you would have to have if you had sold your current property first.
If you have some money saved up, these considerations will not be as dire. But, as your real estate agent will probably emphasise, you don’t want to walk away from a financial transaction as significant as this one more scant than you walked into it.
Deciding whether to sell your property before buying a new one, or acquiring a property before the home you’re currently living in is sold is a bit of a chicken-and-egg conundrum – what is actually supposed to happen first?
When speaking to a real estate agent you can trust, it will become clear that there is no one-size-fits-all approach in this scenario. Ultimately, the decision will boil down to your own personal and financial circumstances.
Having more cash on hand will make it easier to buy something else before selling your current home – and as this decision is likely to be more costly, you’ll be in a far better position to manage all your financial obligations.
However, deciding to sell your current property before getting a new one has its own set of consequences. There may be additional pressure to find another home quickly, which could, in turn, lead to settling on a property that isn’t quite what you were looking for.
Whatever decision you decide to make, it certainly makes a huge difference to have someone by your side that has been doing this for years. Real estate agents often have to help their clients find another property while also helping them to sell the home they’re currently living in.
The benefits of a good real estate agent are far too many to list, but it’s worth mentioning that the big databases of properties they have access to are a great reason to enlist the services of an agent. Chances are that they might have your dream property at the ready, at the right price.
Perfect Agent recommends real estate agents based on your exact needs. Are you looking to sell your property, but still searching for an agent that fits the bill? Simply complete a quick questionnaire, and we’ll put you in touch with a number of agents to choose from.