Is it a good idea to purchase a new home before selling your old one?

Selling a home can be one of life’s most stressful events, but it can be made even harder if you’re trying to find a new home at the same time.

Many people question how to juggle selling and purchasing a home simultaneously. There’s no easy answer about how to go about it, but it always helps if you’re aware of the pros and cons of buying or selling first and can take your time with whatever decisions you make along the way.

The absolute worse thing you can do is put pressure on yourself to buy or sell in a short period of time as this may make things a lot more stressful and could end up costing you more.

Buying first and selling later

It’s not uncommon for people to fall in love with a new home that they want to purchase immediately, even though they still need to sell their current home.

Buying first and then selling is a good option if you have no financial constraints, as it makes moving a lot simpler and there is no risk of having to find interim accommodation – you simply pack up your current home and move straight into your new one.

However, buying first can be risky. Purchasing a home before selling your current one can be costly because you will be paying the expenses of two properties at once, and you don’t know how long you might need to do this for.

One option that can help people in this situation is bridging finance, however this normally has a high interest rate and is only meant to be used short term. Therefore you may be put under undue stress to sell your property quickly, which may not give you time to hold out for the best offer.

It’s also worth keeping in mind that you won’t know how much your property will sell for, so you may end up with less funds available to you than you thought you would have when you bought your new home (although it’s possible you could end up with more too). The point is however that you won’t know your full financial situation until after the sale.

Selling first and buying later

If you want to move homes then selling first makes a lot of sense as you will know how much funds you have to work with when you go to purchase your next home.

However, selling first can have its drawbacks too. Sellers who haven’t yet lined up a new home to live in may find themselves having to rent for a period of time until they find a second property that is suitable. This means having to move twice, which can be stressful for the whole family.

How to make things a little easier

Whether or not you decide to buy or sell first, you can negotiate contract terms to buy yourself a bit of extra time. When selling before buying you may want to ask the purchaser for an extended settlement period so you have the time you need to find a new home.

Conversely, if buying before selling you could consider asking for the property contract to be conditional upon the sale of your current home. Keep in mind however that this may make a contract less appealing.

If you’re buying and selling at the same time (or considering doing so) and would like any advice then contact McGrath Central Tablelands.

 

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