One of the most common questions we are asked here at MOV8 is “should I sell my current home before buying a new property?”. Following the market downturn in 2008 it became common practice to make sure that you had sold your own property before committing to a purchase, with home-movers wanting the security of knowing they’d definitely found a buyer before looking for a new home.
The market has picked up significantly over the last 18 months. At MOV8 we experienced our busiest January for sales ever earlier this year and as a result more and more home movers are asking if it is best to start their search for a new property a little earlier in the overall process.
To help answer this, let’s take a look at the pros and cons of each approach.
For the Strongest Negotiating Position
If you choose to sell first you’ll be in far more control when it comes considering offers on your current property. Instead of rushing to accept the first offer that comes in, you can wait until you receive an offer that meets your expectations. With market demand rising we are seeing more properties going to a closing date and this is something a good agent will be able to advise you on to ensure that you receive the best price for your home within a timeframe that suits you.
If you sell your property first, you will also find that you are in a much stronger position when you come to buy. Sellers of homes that you are looking at may well accept a slightly lower offer from you if they know that you have cash in the bank and that you are not part of a chain, especially if they are looking for a quick sale.
Another added bonus of selling before you buy is that you know exactly how much you can spend on a new property. By knowing exactly what your budget is you avoid the risk of overspending on your new property, only to find out that your existing home didn’t achieve quite as much as you’d been hoping for.
The Downsides of Waiting to Sell First
Of course selling before you buy is not without potential downsides.
If you don’t find a new property that you like soon enough after you have secured your own sale, you could find yourself in need of temporary accommodation. You can manage this risk by planning ahead so that you know what you would do in those circumstances. Consider asking family and friends if they could put-you up for a short time until you find your new home. If that isn’t possible, you may need to rent for a while, in which case you should set aside a budget to allow for that.
You may also need to think about putting larger belongings or items that you are unlikely to use for a while into storage whilst you continue your house hunt.
With the market picking-up, it is worth considering the impact of rising house prices too. Once you have sold, if it takes a few weeks or months to find a new property you may well find that, in a rising market, your budget doesn’t go quite as far when it comes time for you to buy.
Bear in mind though that buying a property before you sell your own property can be a very high risk strategy as well as being very costly. Many people will be unable to raise the mortgage finance on a second property whilst still waiting to sell their own property, let alone carry the cost of two mortgages at once and this is likely to lead to the purchase falling-through or, in extreme circumstances, the buyer finding themselves in financial difficulty when their own property doesn’t sell.
Making Life Easier
- If you do decide to sell your property before committing to buying your new home, ensure that you have an Agreement in Principle for the mortgage agreed early-on in the process so that you can move more quickly when it comes time to buy. An independent mortgage adviser, like MOV8 Financial will be able to explore your options and make sure that you get the best deal for your circumstances.
- If you are selling first, it is still important to look at potential purchases whilst you are going through this process. This will help you to get a better idea of how far your budget will go. Speak to your chosen local solicitor estate agent as they will know the area inside out and can keep you informed about properties as and when they come on the market, making you the first to know. They may even be able to find a hidden gem or two in an area of the city that you hadn’t considered before.
- Try to agree a decent period of time between accepting an offer on the property that you are selling and the Date of Entry, if you are selling first, to allow you to have plenty of time to find new house and get the mortgage paperwork approved and turned around.
- Sign up to our Property Matching System to receive email alerts of properties that are coming to the market and that are matched to your specifications, straight to your inbox.
- Plan ahead. Knowing ahead of time what you would do if everything doesn’t go perfectly will make things much easier if you do encounter any bumps along the way. If you have any questions, speak to your solicitor estate agent. After all, we are here to make things as easy as possible for you!
Get a Helping Hand
As ever, if you are thinking of selling a property, please get in touch with us on 0345 646 0208 or at [email protected] One of our team of experts will be happy to arrange a FREE valuation and pre-sale appraisal visit, or just to have a chat with you on the phone, to give you all the advice that you need to help you to get the best possible value for your property.