Can you buy before you sell in this market?
It’s the age old real estate question… Should I buy before I sell or sell before I buy? This article attempts to show the positives and negatives to each side of the equation to help you decide the best move for you and your family.
If you’re upgrading or downsizing (or just moving), the chances are you have to answer this question. Both (upgrading & downsizing) can be an exciting time, but negotiating the purchase of a new property and the sale of your existing home can be tricky. It’s often hard to know whether to sell or buy first, as you will likely need the proceeds of the sale to fund the new purchase, but also somewhere to live throughout the process.
The very short answer is that both sides of the coin can be complicated.
Selling first is safer.
- It allows you to act with certainty around what to spend
- Allows you to act quickly when you find the perfect home
Downside:
- Set timeframe around finding your next home if you don’t want to move twice
Get around it by:
- Get an extended settlement when selling your home. This gives you plenty of time to buy and settle.
Buying first is risky
- But you get longer to find your next home
- This may put you under pressure to sell in a set time frame
- Or possibly undersell your home to get rid of it quickly to meet your agreements on your purchase
- You may need to “sweeten the deal” with a higher price to encourage the seller to accept your less than ideal terms and conditions of being subject to sale
The short answer is that you get to choose your problem. If you sell before you buy you have the benefit of knowing your exact budget going forward, you can offer stronger terms to the buyer of your next property (no subject to sale clause) and you’re under no time pressure to buy or to sell.
With time pressure, you can easily undersell your property by $10K plus and overpay by $10K plus. More if the market is larger. If you sell before you buy you don’t have the time pressure to sell.
You may have the time pressure to buy however – but this can be alleviated with a rental property.
In the context of choosing your problems, you’re essentially choosing the problem to move twice.
If you buy before you sell you are choosing the problem of having to sell in a tight timeframe. Plus exposing your offer to your buyer to lesser terms and conditions (subject to sale clause) and in a competitive bidding environment you may have to spend more to secure the property.
But you will only have to move once. Therefore the problem will be to undersell your property.
The point – both sides have problems, and both sides can be difficult. Pick which problem that suits and move forward.
