Should you sell first or buy first?
It’s the classic conundrum for anyone looking to move home – should you sell first or buy first?
Both options come with an element of risk. If you sell first and can’t find the right home to buy, you may have to rent for a while until you find your dream home. But if you buy first and can’t sell your old home, you’ll have to splash out on mortgage payments on two properties. Either way, there is a lot of cash at stake.
To help you choose the best strategy, here are our top tips:
Benefits of selling first
Avoid a chain
Sellers prefer buyers who aren’t stuck in a chain. If you have already sold your home, your offer is more likely to be accepted than the same offer from someone who’s just put their house on the market. Being able to move quickly with no risk of your home’s sale falling through may even mean you can negotiate a better price.
Less likely to be gazumped
Until contracts have been exchanged, an agreement to sell isn’t legally binding. This leaves buyers at risk of gazumping (where sellers accept a better offer, so you must increase your offer or miss out). It’s a frustrating situation – and one you want to avoid. That reassurance of a smooth and quick sale may help them resist the temptation to get an extra £5,000 for their property.
Cash in the bank
Money from your completed sale will provide the deposit on your new home. And you’ll know exactly how much you can spend, rather than estimating what you may get. This helps you target your home search, saving time and ensuring you don’t bust your budget.
No bridging loan
A bridging loan allows you to buy a property before having the funds from the sale of your existing one. High in interest, they’re risky if your sale takes a long time as they could land you with bigger financial problems.
Negatives of selling first
Slipping off the ladder
If prices are rising while you’re off the property ladder, as they are in most areas of the UK now, you may start to panic as you feel your dream house is slipping away. If it’s a sellers’ market, consider buying first, as selling should be straightforward. Ask your estate agent for advice.
Taking your eye off the prize
Don’t set your plan in stone, as you could miss out on the perfect purchase. Keep your eyes open as your dream home may come on the market in the meantime. Options such as bridging loans or extending the completion deadline could help you secure the house of your dreams.
Renting: hassle and cost
If you sell your home, you must move out when the deal completes. And if you haven’t yet found your next home, that probably means renting. Renting means hassle – and moving twice, which can be stressful and more expensive.
The accidental landlord
If you put your home on the market, find your dream home, but your original property isn’t selling, you may be forced to rent it out to help with double mortgage costs. Becoming a landlord comes with a lot of responsibility and you will need to look for tenants or hire a management company. However, the rent payments could be enough to pay your mortgage every month while you wait to sell your old property.
What is the best option?
Selling first – or at least having an offer on your property – will put you in a stronger position to buy the home you want and can help you avoid financial challenges such as bridging loans.
Although you might prefer to find your dream home first, it can mean your offer is less likely to be accepted. That means it can be a good idea to put your property on the market whilst you look. This will put you in a stronger position to buy and sell successfully.