When a homeowner decides to put their property on the market, the first question they inevitably ask is: sell first then buy, or buy first then sell?
Everyone likes peace of mind, but in real estate, properties are constantly being sold and bought, and no one wants to risk ending up without a home or having two mortgages. There is no right or wrong answer as to whether one should sell or buy first because it all comes down to personal and financial circumstances.
To help with your decision, here are the pros and cons for both methods.
Buy first then sell
If you want the comfort of knowing that after you sell your current home, you have somewhere to move to afterwards, buying first makes sense.
Generally, if you haven’t sold yet, you can take your time with the buying process. There is no pending deadline or financial pressure, which may force you to make a rushed decision. When you buy first, you may be able to negotiate an extended settlement to give yourself more time to sell your home.
This may suit some vendors However, this can be a negative as some vendors may be turned off by an extended settlement and be less likely to negotiate with you on price. In that case, you may need to increase your offer in order to convince the owner to hold their home for a bit longer.
There is also the possibility that after you have secured your next home, your current residence takes longer than expected to sell, which leaves you with two mortgages to pay off. This can be quite stressful and you may be vulnerable to selling your home for a lower price, or on terms that aren’t suitable just to seal the deal.
Sell first then buy
The traditional method is to sell your home first and then buy.
The advantage for you is that you can take your time to consider your price and negotiate offers from buyers. There is also the option of negotiating an extended settlement to give you more time to find your new home.
You also won’t have to worry about potentially paying two mortgages at once and once you have sold your first home, you have additional equity to use for the next purchase. Nevertheless, there are potential drawbacks with this tactic.
After you sell your first home, you will have a limited time frame in which to buy your next property. If you are too indecisive, miss out on potential properties, or there is not much for sale, you may end up having to rent. That will mean having to spend money to pay the rent and dealing with the hassle of moving twice.
Another issue is if you wait too long, property prices may rise and you could find yourself priced out of the area you hoped to buy in. At the end of the day, there are advantages and disadvantages to selling first or after buying, so don’t rush into it.
Make sure you do your research thoroughly and always speak to a professional.
