Buy or Sell First? Juggling Settlement Without Dropping the Ball

It’s a common conundrum – how do you balance buying a home while selling the old one? buy_sell_business

If it’s your own home that you’re putting on the market, the stakes are even higher.

You don’t want to be paying two mortgages, but you don’t want to lack a roof over your head either.

In a perfect world, the two transactions would line up seamlessly.

Even if you manage to juggle the two contracts simultaneously, other problems can still arise.

Contracts can fall through, legal issues can delay settlement, or the other party may request an extension.

Which leads us to the question: buy first, or sell first?

If you must do one or the other, what’s the safest option?

There is the danger that you’ll have to bend your finances to make the timeframe work.

You don’t want to be rushed into paying too much because you have nowhere to live.

Similarly, you don’t want to lower your selling price just to make the transaction line up.

Logic dictates that selling first is the safer option. 

By selling first, you can avoid paying two mortgages simultaneously for an unknown period of time.

It also means you know exactly how much money you can spend on the new property.

To know for sure, you have to investigate the state of the market, identifying whether it is a seller’s market or a buyer’s market.

This, more than anything, can have a huge impact on your decision, because if your home is likely to sell quickly, you’ll need a back-up plan in place to help you cope in between properties.

  • Seller’s market: Means these are more buyers in the market than properties available.
    With plenty of competition for each listing, the best option might be to buy first, assuming thatgrowth housingyou’re buying and selling in the same market.
    That way, there’s less pressure to settle for anything less than what you want when you’re shopping for a new home, as you’ll be reasonably confident of getting a good price when you sell.
  • Buyer’s market: In this situation, selling first will help avoid having two properties on the go at once.
    Whether this is a real issue depends on your financial ability – but it’s a huge expenditure of money, especially if the process takes several months.
    Selling first gives some wiggle room to hold off for the best price too, since you won’t have the deadline of another settlement looming.

Currently, with our property markets around Australia being very fragmented, some locations are clearly a buyer’s market but more and more locations in our capital cities are becoming seller’s markets with few good quality properties available for every property buyer out there.

What other things do you need to consider?

The pros and cons of selling first: house sale seller owner sold property

  • The clock will be ticking to find a new property
  • While you’re searching, property prices may increase and could even create issues with buying your ideal home or in your favourite neighbourhood
  • Alternative accommodation may need to be found for you and your belongings, which can be costly
  • You can wait until you achieve the sale price you want, and you’ll know what you can afford to buy
  • You may be able to negotiate a longer settlement time, like six months, to give you some breathing space

The pros and cons of buying first:

  • You won’t need to juggle two mortgages
  • You won’t need to worry about renting short-term or staying in a hotel between settlements, which can be a major concern for young families or those who work from home
  • A bridging loan is a possibility for some, which will give you the short-term finances to buy before selling
  • There’s no pressure to find a home and you can concentrate on a quick and effective sale

Some extra tips: Property-Investment-Checklist-300x199

  • A longer settlement time when selling can ease the pressure of finding a new place quickly. Even if you have to drop your sale price a tad to gain the buyer’s approval, it could save you a lot in interim accommodation costs.
  • Find out what the other parties’ circumstances are. You may be able to find a mutually beneficial agreement.
  • Use the services of a buyer’s agent to help source a new property quickly. They can often find properties that aren’t even listed on the market yet and remove a lot of stress from the process overall.

Now is the time to take action and set yourself for the opportunities that will present themselves as the market moves on

Metropole

If you’re wondering what will happen to property in 2020–2021 you are not alone.

You can trust the team at Metropole to provide you with direction, guidance and results.

In challenging times like we are currently experiencing you need an advisor who takes a holistic approach to your wealth creation and that’s what you exactly what you get from the multi award winning team at Metropole.

If you’re looking at buying your next home or investment property here’s 4 ways we can help you:

  1. Strategic property advice. – Allow us to build a Strategic Property Plan for you and your family.  Planning is bringing the future into the present so you can do something about it now!  This will give you direction, results and more certainty. Click here to learn more
  2. Buyer’s agency – As Australia’s most trusted buyers’ agents we’ve been involved in over $3Billion worth of transactions creating wealth for our clients and we can do the same for you. Our on the ground teams in Melbourne, Sydney and Brisbane bring you years of experience and perspective – that’s something money just can’t buy. We’ll help you find your next home or an investment grade property.  Click here to learn how we can help you.
  3. Wealth Advisory – We can provide you with strategic tailored financial planning and wealth advice. Click here to learn more about we can help you.
  4. Property Management – Our stress free property management services help you maximise your property returns. Click here to find out why our clients enjoy a vacancy rate considerably below the market average, our tenants stay an average of 3 years and our properties lease 10 days faster than the market average.
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Rita Thomas

About

is a Property Strategist with an accounting background and over 30 years’ Commercial Banking experience. She is a passionate property investor who enjoys helping her clients create wealth through property investment using Metropole’s strategic approach.
Visit www.MelbourneBuyersAgent.com.au


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