Logic might tell us in a market environment where property prices are showing signs of increase, it is generally in your best interests to buy first - while those operating in a market that is moving downward, might find it safer to sell first.
Neither are always possible, or the most convenient or wisest choice.
Buying before you sell, and selling before you buy can both work for you with the right planning and consideration of market trends, personal circumstances, and perspective.
Weighing up the pros and cons
Sell now, buy later
Selling my property before buying another is widely considered to be a less risky approach, but it can also be far less convenient too. While you might avoid paying for two mortgages at the same time, or dodge the need for a bridging loan which places you in a safer, more preferable financial position, buyers who rely on the sale of their home to fund the new purchase of a new one do increase the pressure of finding another property by a certain date. Operating under such a time constraint reduces the flexibility you might have otherwise when buying first.
In a market where property prices are quickly rising, the longer it takes between selling and buying could also mean a significant difference in the purchase price of your next home, placing you at risk of missing out on your ideal location or type of home because it has become unaffordable.
Selling first can provide you with certainty on your budget for your new home, as well as the assurance that the money is available and at your disposal when you’re ready to buy. On the flip side of this, if you haven’t found what you’re looking for in time, you’ll need to find a place to temporarily move into, which comes at a cost and inconvenience.
For some, rental accommodation during this gap period may be considered an advantage rather than a disadvantage, providing both ample time for your property search to continue, as well as the opportunity to live in an area before committing to purchasing a property in it.
Buy first, sell later
You’ll only need to move once when you buy first, and if house prices are rising quickly, you could potentially find yourself a bargain before the market is too hot - while simultaneously letting the upswing increase the value of your current home before you sell.
But those who buy first can also overestimate the worth of their current home, or underestimate the time it might take to sell. Both can place you in a financial pickle, and place pressure on you to sell for less than you would have liked to accept. It may also be more difficult to secure a loan when you already have a mortgage, and while bridging finance is available in some cases, the rates for these are significantly higher.
Buying property first undeniably offers the freedom to make decisions in your own time and at your own pace, allowing you to focus on making the most out of your previous home’s sale when you choose to go to market. It does however rely on you having a much stronger financial position to work with - and for many relying on the sale of their home to buy a new one, this may not be an option.
The key to success, whether you decide to buy or sell first, is in the way you’re able to manage both sides of the transaction with the right advice and planning.
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Your unique set of circumstances will determine what is the best move for you when it comes to selling and buying.
Chidiac’s expert sales agents take into account exactly where you’re at and how it fares with the state of the market. With a strong understanding of your situation and goals, we tailor our approach to guiding you through, from beginning to end.
