Five Good Reasons To Buy Before You Sell
Originally published on Linkedin.
The dynamics of Australia’s property market, with housing values increasing at such a rapid rate in most areas, has meant that currently there is a lot of mobility. People are actively looking at whether there is the opportunity to sell their properties, pocket some significant gains, and find somewhere new or even upscaled to settle.
One of the common questions that we get at Hello Haus from our clients is on whether it’s better to sell the existing property first, or buy the new home before selling. It's a subject that I was recently invited to contribute to an article on Savings.com.au on. My advice, when the market is behaving as it is now, is always to secure a new home first.
There are five main reasons for this:
- Once you sell, you’re on the clock. You can always negotiate with the buyer of your property to have a period where you continue to occupy your former home while looking for a new one, but that still puts a firm date on when you’ll need to be out the doors by. Because competition among buyers is fierce, that deadline can start to loom well before you’ve been able to secure the new home. No one wants to sort temporary rental accommodation (and any period of time renting is dead money), so what often happens is that people in this situation find themselves panicking, and putting themselves in a weaker negotiating position. They often end up either overpaying or making serious compromises to what they wanted to purchase just to secure somewhere to live.
- A lack of listings can make it difficult to find the place you want. This follows on from the first point, but depending on where you’re looking to buy, there might not be many options on the market. If you’re approaching this from a “buy first” perspective, you give yourself the time to wait for the right property to become available first, and at that point you’ll also be ready to sell.
- You could snooker yourself on price by selling first. In many parts of Australia, the value of property is escalating weekly, if not daily. You might assume that the money that you get from the sale of your existing property will be sufficient to buy the ideal new home, but that might not be the case even a couple of weeks down the track.
- You’ll be better informed to make the right decisions when selling. When it comes to selling a property, information is king, from how to prepare the property, to the motivations and interests of the buyers. If you’re looking to buy and sell in the same area, you’ll even get a feel for who’s looking for property, and why. All of this will put you in a stronger negotiating position when it is your turn to be the seller.
- You’ll know the sales agents better. When it does come time to sell your home, you’ll have a better sense of which agents best serve the interests of both buyer and seller, which can be trusted to return calls, and more generally how to engage with them and the tricks they use. That way, when agents do pitch for the business to sell your property, you’ll be able to move forward more confidently with the right one, resulting in a better return for the property sale.
Of course, you do still need to keep the sale of your existing property front of mind as you go through the buying process. You’ll need to know what realistic range your property will sell for, to understand the resources that you have access to, for example.
However, the reasons that people might consider selling before they buy don’t apply in this current market. The risk of the property taking an extended length of time to sell (meaning that you’re maintaining two mortgages or a bridging loan) is minimal, and even if it does take a while to sell the property value will be accumulating at a rate that covers the short-term financial consequences. You’re also not going to feel pressured to sell at a compromised rate, given that there will be plenty of interest among buyers to negotiate with.
When the property market is slow or declining, there is a compelling argument to sell first for these reasons. However, while the market favours sellers, as it does now, securing your new home should be your first priority.
For more information regarding the strategy behind buying and selling simultaneously, contact the expert in negotiation at Hello Haus today!