You’re ready to upgrade to a new home but you’ve hit a substantial brick wall. What do you do first – buy your new property or sell your current home? There are many variables and scenarios to consider in this situation but overall, our opinion is you go for the ‘buy first and then sell’ option. Here’s why:
Finding a new house is no easy task. When upgrading it can take months, or even up to a year, to find a suitable property. If you sell first, you may find out yourself out in the cold – literally! – for a long period as you hunt for the right property.
Price is another consideration too. The higher up the property market you go (i.e. the more expensive the property) the less supply available. Limited supply means a higher demand for these properties so often the one you have your eye on sells for a much heftier price than expected. If you sell first and end up underestimating the purchase price upgrade, how will you cover the shortfall? And where will you live in the meantime?
Only take this option if ….
Our recommendation therefore is to always buy first and then sell. But this all depends one big factor – are you a strong enough financial position to afford this option without putting an added burden on your situation? To work this out, you need to understand your cash flow and bridging options but most importantly, seek bank approval. Will they allow you to buy first without a sale contract on your existing property?
An extra tip: when doing your sums be conservative in the expected sale price of your current property. You don’t want to end up with a shortfall due to lower-than-budgeted-for sale price.
We’re here to help
Still unsure about the ‘ins and outs’ of whether to buy first and then sell? Connect with us today so one of our experienced brokers can run you through the options to help you make your decision.