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Here’s why it’s Best to Sell a House Before You Buy a House
Written by Gavin Brazg - www.TheAdvisory.co.uk
such pressure on making your sale is a risky strategy & in many cases
it’s lead to homeowners selling for less than they deserved.
Sell a House Before You Buy a House (Reason #1)
“By selling before you buy you put yourself in a strong negotiating position when dealing with prospective buyers”.
This is true because:
1. Whenever you sell anything, the strongest position to be in, is when you’re least need to make the sale.
2. If you’ve not fallen in love with a new property - had your offer accepted - need to sell quickly to raise the funds needed to complete on the purchase - then you can’t be pressurised in to selling before the right offer comes along.
3. You remain in control of the pace of your sale. You’re free to decide when & who you’ll sell to.
won’t matter if your home doesn’t sell as quickly as you thought.
You’re free to hold out for best price.
Sell a House Before You Buy a House (Reason #2)
“By selling before you buy you put yourself in a strong position when making offers to vendors. You’ll be a preferred buyer”.
Beware! Selling Before Buying is Not Risk-Free
Here are the 2 main risks associated with selling first:
1. If prices are rising fast, selling and then taking a long time (3 – 4 months) to find a new home can spell disappointment.
2. If you sell and can’t time your purchase to perfectly overlap your sale, you may have to rent for a period.
Most seasoned sellers don’t mind renting. They’ve been part of a chain before and know that renting (although mildly irritating) is in reality a far less stressful proposition.
If you’re not prepared to rent for any length of time you’ll have to make it clear to buyers that you’ll only accept their offer on the condition that you find a suitable property to buy.
Ask yourself how much time you think you’ll need. Then try and agree that period with your buyer.
In return for your buyers patients you’ll take your house off the market and promise not to sell to anyone else.
It’s perfectly possible that you may not find a suitable home to buy within the negotiated time period. Or you feel that values have moved on since you first agreed a price & now your agreed sale price is looking a little light.
In both these situation you and your buyer need to sit down and renegotiate.
If your buyer won’t renegotiate you’ll have to put your property back on the market & start again. This will sting a bit but it won’t sting nearly as much as underselling for £10K’s.
Tip No.1 - Do Your Research!
Before putting your property up for sale make sure you know:
§ Where you want to move?
§ What type & spec of property you’re in the market for?
§ If that kind of property often comes up for sale?
§ That you’re pre-approved for a mortgage?
§ That the properties you’ll be interested are affordable?
Next thing to do is put your property on the market & wait for a decent offer.
Once you’ve snared a buyer (or have started to attract a steady stream of positive viewing) start your house hunting efforts in earnest.
Really put yourself out there, hassle estate agents constantly and make yourself available to view every (& any) suitable property.
Tip No.2 – Choose a Good Conveyancing Solicitor!
A good solicitor will help you control the pace of a transaction. They can speed things up when needed but more importantly they can slow things down if you need more time to find that new home.
When you’re selling property your solicitor, not your Estate Agent (if you bother to use one), will be your greatest asset!
The Dangers of Buying Before You Sell
First of all, expect to be gazumped (you are now in the situation where it is most likely to happen).
Second of all, expect to pay over the odds to secure the house you want!
Of course you may get lucky and avoid both these things. But ask yourself this:
”Would you take your house off the market for a buyer that still had to sell their house (i.e. a buyer that’s not really ready to buy)?”
Wouldn’t that buyer have to offer you more money than someone who was ready to proceed immediately?
Thirdly, you’ll have to take out a Bridging Loan facility in order to finance your purchase & this will be:
2. Financially potentially pretty risky.
Typically your repayments will be between 0.75% - 1.25% of the loan amount (per month) + fees. That can add-up quickly.
If you can’t sell your property & have to pay-off your mortgage & bridging loan for any sustained length of time it can be crippling.
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