Juggling money is one of the skills you quickly acquire when you decide it’s time to sell your existing home and move up the property ladder.
Formulating a strategy for your sale and making the next purchase is critical to easing any tensions that might come with being at the centre of two simultaneous and large financial transactions, while also being conscious about where you’ll live!
Our agency has a long history of working in this area with clients who sell and move to their next property. Indeed, most residential deals involve owners buying and selling in quick succession.
Before embarking on this journey, you should think through how you might time your deals so they’re economically efficient and cause minimum inconvenience to your family.
The most obvious tactic is to sell your property first and then consider where you might live next. However, when the market is as strong as it is currently, this can feel risky.
If you are absent from the property market, even just for a couple of months, buying again can prove difficult. Prices can move quickly, either due to a shortage of supply or an interest rate cut. And the type of home and location you thought you could afford can become beyond your reach in just a few weeks.
It’s best, if you feel you can manage it, to sell and buy simultaneously.
Of course, all the pieces don’t always fall into place at the same time. Perhaps, you find your next dream home but not a buyer for the current property.
But to help you think through this challenge, we have outlined five basic approaches. We hope you find them helpful as you prepare for your next move.
1. Don’t be afraid to ask
Negotiation is a vital part of any property purchase. If you haven’t sold your property yet, don’t be afraid to seek a longer settlement period. You can put this into your contract of sale. This can help ensure you’re not left homeless or forced to rent while you look for your next property to buy.
2. Don’t be afraid of ‘no’
Even if you think the seller will not yield on the standard terms of a contract and settlement period, there’s no harm in asking for either a longer or shorter period, depending on what you need. You never know your luck. The seller may be keen to get the deal done, or be worried themselves about their next step, and grant your request.
3. Contingency deal
If you find a property you like and wish to make an offer before you have sold your home, you can try making an offer that is contingent on your own property being sold. This is a pretty popular strategy in America but is not as common in Australia. Nevertheless, some circumstances might make this a reasonable request and it can be worth trying.
4. Fall-back position
If you intend to buy before you sell, you should have a financial plan in place if you cannot convince the seller of your new home to transact on your terms. Check out your ability to get a bridging loan, which will finance both the new purchase and your current home until it is sold. With delays in finance due to lockdowns, you should have this facility set up well in advance.
5. Don’t forget your deposit
If you want to commit to a purchase before selling, then make sure you know where you’re going to find the deposit. You can use the equity in your existing mortgage, or at worst cover it with your bridging loan.
There can be a lot of moving parts in selling your existing home and buying your next. If we can help you understand the process, please do not hesitate to contact us. We can discuss the current local market: price trends, buyer preferences and the best way to market your home to achieve its maximum value and achieve a fast sale so you can move on up.