When you’re looking for a new home, one of the first things you need to consider is the order of events – do you sell your existing property before you buy, or after? The hardest time to buy a home is when you already own one. Many of us don’t have any choice and need to sell, as the equity from your existing house is needed to put into your new home. In a busy ‘sellers’ market, majority of properties attract multiple offers, because of this, the sellers are less inclined to accept a conditional offer, especially if requires a sale of a property. Buyers need to be in a 'cash' position in order to be competitive, which is hard to achieve if you already have house to sell. What you do have is a choice whether you buy or sell first, Here are some factors to consider before taking the plunge. CONDITIONAL PURCHASE Choosing to buy first and make your purchase conditional on the sale of your existing property is a fairly standard clause in property sales agreements. It buys you some time to market your home for sale. You’ll need to make sure your offer is appealing. If they’re considering your offer against an offer with no/minimal conditions, there’s a high chance they’ll accept the other offer over yours, as your offer has a higher risk of falling through. As a result, you could keep missing out. SELLING FIRST Selling first, then starting to look for your new house with cash puts you in a competitive position to securing a property at the best possible price. If you haven’t settled on a new property by the time your own home sale settles, you’ll need to rent temporary accommodation (moving twice). One way to get around this is to set a lengthy settlement date on your existing property to give yourself a decent length of time to find your next home. BRIDGING FINANCE Before making a conditional offer on a property, talk to your bank or finance company about the possibility of arranging bridging finance as a back-up option if your house doesn’t sell by the deadline. Bridging finance is an additional short-term home loan that can help you to purchase your new home while your existing one is still being sold. This has some risk, though – if your existing home sells for less than you needed, you could end up with more debt than you’d budgeted. SELL & RENT BEFORE PURCHASING This can take a lot of pressure off the sale and purchase process as it eliminates any time frames and would avoid excepting a less then favorable offer if you were under pressure to make a settlement deadline. Many people chose to rent for a short period which gives them time explore the suburb they intend on buying in. KEEP YOUR HOME AS A RENTAL If you have enough equity, you may be able to keep your existing home as an investment property, with low interest rates and the removal LVR it may not be as difficult as you think, talk to your bank or mortgage adviser to find out if this is a possibility. A property manager will be able to help you will what your property will rent for. At the end of the day, your best course of action is to work with a real estate professional who can provide you with the local knowledge and insights you need to make an informed decision for your specific circumstances. For more information [email protected] | 0800 789 1011 Leave a Reply. |
James Twiss
Licensed Business Owner of Harcourts Four Seasons Realty 2017 Ltd Greg Roberts
Licensed Business Owner of Harcourts Four Seasons Realty 2017 Ltd Archives
September 2020
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