Whether it’s downsizing to a cosier space, upsizing to accommodate a growing family, or seeking a new adventure in a different suburb,one common dilemma arises – should you sell your current home first or buy your next one first? This decision can be fraught with uncertainty and anxiety, as each option carries its own set of advantages and risks. In this article, we’ll explore the pros and cons of both approaches and offer some strategies to help homeowners minimize the inherent risks.
One option is to put your current property on the market before starting your search for a new home. While this approach offers several advantages, it also comes with its own set of concerns.
Fear of Not Finding a Suitable Home on Time: Homeowners often worry that if they sell their current property first, they may struggle to find a new home that meets their needs and preferences within their desired timeframe. This fear can be particularly pronounced in competitive real estate markets.
Pressure to Settle for an Unsuitable Property: In cases where finding a new home takes longer than expected, individuals may feel compelled to rush their decision and settle for a property that doesn’t fully align with their desires or requirements. This can lead to buyer’s remorse.
Alternatively, some homeowners opt to find their dream home first before listing their existing property for sale. While this approach allows for more flexibility in choosing a new home, it has its own set of challenges.
Subject to Sale Contracts: Buyers who choose to purchase a new property before selling their current one often must make offers that are subject to the sale of their existing home. These conditional offers can be less appealing to sellers and may put buyers in a weaker negotiating position.
Overestimating the Value of Your Current Property: In an attempt to secure their desired new home, homeowners may overestimate the selling price of their current property. This can lead to difficulties in the sale process and potentially derail their plans.
Stronger Position for Purchase: Selling your current home before buying a new one often puts you in a stronger financial and negotiating position. You can make unconditional offers, or offers not subject to the sale of your property, which can be more appealing to sellers and may result in a smoother transaction. In the current market cash buyers are securing much better sales.
Clear Budget: By selling first, you’ll know exactly how much you can allocate toward your next purchase. This clarity can help you make more informed decisions and avoid any unpleasant surprises.
While selling first has its advantages, there are strategies to minimise the risks associated with this approach:
Bridge Financing: Consider securing bridge financing, which provides you with the necessary funds to purchase your new home before selling your current one. This can alleviate the pressure of time constraints.
Extended Settlement Date: Negotiate an extended settlement on your property as a contingency. This will allow you to remain in your home for a specified period (ie. 2-3 months) after the unconditional date to give you more time to find your next property.
Pre-Approval: Get pre-approved for a mortgage on your next home before selling. This way, you’ll have a clear understanding of your budget and can act quickly when you find the right property.
The decision to sell your current home first or buy your next one first is a significant one, and there’s no one-size-fits-all answer. It ultimately depends on your individual circumstances, risk tolerance, and local real estate market conditions. However, it’s crucial to weigh the advantages and disadvantages of each approach carefully.
Experienced local agents Thomas & Christine Reil from Ray White Whangarei offer the following suggestions:
If you find yourself facing this homeowner’s dilemma, consider seeking guidance from experienced real estate professionals who can help you navigate the process, assess your options, and make informed decisions.
Thomas and Christine are available anytime for a no-obligation chat, and can help you make your move a successful and satisfying one. They can be contacted on 021 242 2249 or via their website: thomasreil.co.nz – At the end of the day, their goal is to ensure a smooth transition to your new living situation while minimising the stress and uncertainty that can come with such a significant life change.