Should you buy before you sell? It’s the question that has been circling around real estate in Australia from the beginning, essentially because there is no correct answer – it all depends on your personal preference and circumstances.
Regardless of whether you’re a homeowner looking to upgrade, downgrade or simply to relocate, you will likely be looking to buy a home at the same time as you sell one. However, what should come first?
The demand in the market doesn’t make your decision any easier, as according to the Australian Bureau of Statistics there are more than 50,000 individual owner occupier home purchases every month.
Here’s a look at both sides of the ongoing debate, with reasons why you would consider one over the other.
Perhaps one of the best parts of buying first is that you can take your time, as there is no looming settlement date fast approaching on your own home.
Having time up your sleeve is like having an extra weapon in your arsenal when it comes to viewing homes for sale. You can place offers without feeling rushed, as well as holding the power in negotiations, especially if the vendor is looking to sell their home quickly.
Stumbling across the perfect home that you know you must have can also provide the motivation to buy first. For some, this is the most suitable option to take, given that if you’re too slow you may miss out on the opportunity! There is of course, the potential to rent one of your properties out to help cover the costs of owning two pieces of real estate in Australia.
Furthermore, buying first means you are guaranteed a place to live once you sell your property, and you will only have to move once (rather than live in a rental or with your folks while you find a home to purchase).
On the other side of the coin, you could find yourself in an anxiety-inducing period of financial hardship if you’re home isn’t selling as quickly as expected.
This could result in you being like the aforementioned vendor looking for an urgent sale that you benefited from earlier. This means your home could sell for less than its value or with undesirable terms.
However, the low interest rates and consequent demand for property at the moment ensures that this is unlikely to happen. In fact, statistics from CoreLogic RP Data show that in terms of real estate in Sydney, houses from particular suburbs are on the market for as little as 16 days before being snapped up.
Nevertheless, it can be difficult to get finance to cover both properties, as you will essentially need two home loans
Provided there are no other external factors, selling first means you’ll have acres of time to decide on a price, be flexible on your sale date, negotiate with buyers and and be picky with which offers you’ll accept.
This can help ensure you get the best price for your home, with conditions that suit you.
On top of this, you won’t be saddled with two home loans at once and potentially face distress from perhaps being too financially optimistic. Given that you will likely be free from most, if not all of your debts, it could also be a much more pleasant visit with your lender!
It can also help you in your hunt for your next home, as you will know your exact financial standing.
Despite this, if you’re unable to find the right property soon after the sale of your home then you will have to face the prospects of rental properties or moving in with family, not to mention paying for storage.
While this may not bother some, it can be trying for families with kids or pets who need a solid home base. This can result in you making a rash decision, potentially buying a home that isn’t quite right or for a price that could have been negotiated.
However, you’ve got plenty to choose from as the volume of auction results are working in your favour. The 2015 winter market set an all-time high in surpassing 26,500 sales via auction.