When it is time to move houses, whether you have your heart set on a new home, upsizing, downsizing or relocating, you have to decide what to do with your old one.
Making the right decision can be a bit tricky. Should you sell your property before moving, or is it smarter to lock in a new home while still in your current one? It's a classic dilemma that requires a close look at the pros and cons of each option.
Take a moment to weigh these factors so you can make an educated decision that suits your specific needs and circumstances.
Buy or Sell First?
Current Market Dynamics
The first step in deciding whether to buy or sell your home first is to assess the current market. Is it leaning towards buyers or sellers?
In a buyer's market
In a buyer's market, where there are more houses for sale but fewer buyers, prices may dip, and selling might take longer. Selling your existing home first could be wise to understand your true financial situation before purchasing the next one.
In a seller's market
In a seller's market, with fewer homes available and high demand, buying first might be a good move. Your existing property will likely sell quickly and at a price you're content with.
Factor in your finances
Without hesitation, the first step you should take into consideration is your financial situation.
When you have a clear picture of your purchasing power you are in a better position to place an offer on a property. By knowing how much capital you can access and what you can afford in mortgage repayments you be able to make decisions with confidence.
If you have built up enough equity in your existing home, you may be fortunate enough to not have to sell your house before buying. However, these are all the options you won’t know until you have accessed your finances.
It is always recommended you consult with a local real estate professional for advice on real estate market trends, and a financial advisor to help you understand your buying power and lending options.
Buying a House Before Selling
Pros
Peace of mind: Securing a home offers a sense of tranquility, alleviating any worries that may arise if your current property sells quickly.
Utilising Equity: You can use existing equity as a deposit for your new home, capitalising on your investment.
Strategic Negotiation: Your offer might be more appealing without reliance on the sale of another property, giving you a strategic advantage.
Luxury of Time: Exploring the market thoroughly allows for a well-informed decision, ensuring your new home aligns with your wants and needs.
Easier Transition: Buying before selling is beneficial for families with school-aged children, minimising disruptions to educational commitments and social connections.
Cons
Bridging Finance Constraints: Organising bridging finance may come with a time limit, introducing constraints in the selling process.
Financial Gap Challenges: Selling at a lower price may require funding the difference in costs, affecting your overall financial planning.
Pressure to Accept Lower Offers: Time constraints may force you into accepting a suboptimal offer, compromising your ideal selling price.
Double Mortgage Repayments: Simultaneous payments for the old and new properties can strain your budget during the transitional period.
Market Variability Risks: Buying before selling exposes you to market fluctuations, potentially affecting your financial outcomes.
Selling a House Before Buying
Pros
Clear Finances: With cash in the bank, proceeds from the sale contribute to your budget for the next property, giving you a clear understanding of your available funds.
Streamlined Budgeting: Knowing exactly how much you can spend on your new purchase allows for detailed budgeting, considering additional expenses like renovations.
Negotiation Leverage: Time allows for better negotiation deals and offers, enhancing the overall value of your purchase as you are ready to buy.
Reduced Financial Strain: Selling your current home first avoids the financial strain associated with double mortgage payments, allowing for better management of your financial resources.
Cons
Rushed Purchase Decisions: A quick sale may lead to a rushed purchase, limiting your ability to thoroughly research and assess available options.
Market Price Fluctuations: Local property prices could change between selling and buying, posing a risk to your budget and purchasing power.
Additional Renting Costs: Renting between homes can incur extra expenses, including monthly rent, security deposits, and utility bills. Plus the hassle of having to move more than once.
Potential for Limited Choices: The urgency to secure new housing quickly may limit your choices, forcing compromises on certain preferences.
Emotional Stress: Time-sensitive transitions can induce emotional stress, especially if your home sells quickly, leading to heightened anxiety and decision-making stress.
After carefully considering these factors, the decision on whether to buy or sell a house first depends on market conditions, financial stability, and personal preferences. It's a big decision, so take the time to weigh your options wisely.
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