By Guest Blogger, Pete Wargent,
Next Level Wealth
Major life decisions
When thinking about selling your home and making a move or upgrade to a superior or more spacious property, many potential sellers are stuck with that tricky dilemma of whether to sell before they buy their next home…or alternatively, buying before they sell!
There are various pros and cons of each situation to consider. Let’s take a look at the key considerations to help you navigate your way through this potentially very important life decision!
Sell before you buy…?
The main benefits of selling your home before you buy your next property include having all of your available funds readily available to buy, knowing exactly what your purchasing power will be and potentially reducing your stress levels by allowing you to take more time in the buying of your next home.
In this scenario you do not have to worry about complexities such as bridging loans, and you may even be in a strong enough position to make a cash offer, which vendors often love.
But what of the downsides? If buying your next property takes longer than expected, then you may face an unwelcome situation wherein property prices are rising.
Not buying swiftly in such an environment can begin to become a false economy, and you might also experience fear of missing out (‘FOMO’) if prices start to rise quickly, thus making you feel pressured to buy something to avoid missing the upswing phase of the market cycle.
You may also need to factor in rental costs, and the inconvenience of being a renter into the equation.
…or buy before you sell?
What of the alternative, to buy a new place before you sell? The main advantage of this approach is avoiding multiple moves, and in a rising market it may allow you to participate in the rising market through owning two housing market assets…assuming, that is, you can afford to hold them!
Of course, you may need to manage two mortgages, and ideally you don’t want to put yourself under unnecessary financial pressure by going down this route.
Tight market conditions
Do market conditions play a part in this decision? They absolutely do!
Anyone who has tried to buy a quality property lately will be well aware of the challenges.
At the moment we have record high population growth in Australia, and relatively low stock listings, meaning that it can be tough going to find the right home.
Source: SQM Research
In Brisbane we’ve seen many examples of suburb records in 2023, while over in Perth, half of all properties listed for sale are being sold before the first open home. That’s not an easy market to be buying into!
Overcoming fears
It can be an all too common fear that many vendors have about being stuck without having somewhere to move to.
To mitigate the risks, you may consider negotiating a longer settlement on a property transaction, or if you have the ability to stay with family or friends temporarily – stressful though that can be! – then this may help to smooth the transition.
A key risk to avoid is being ‘out of the market’ for too long and having to buy back in at much higher prices. Through the early stages of the pandemic, for example, many vendors sold in a panic only to have the market shoot higher and away from them once interest rates fell.
Using a market professional can help too. A buyer’s agent can help with the entire process of moving to a new home.
When you are selling, they can offer vendor advocacy to help select best sales agent to manage the sale. And then when you are ready to buy they can undertake the complete search, appraisal, due diligence, and negotiation process - removing all the stress normally associated with this.
In the current tight market conditions perhaps, the important thing is to have a clear strategy, and to act as decisively as possible when selling and buying.
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