Are You Looking To Upgrade in 2024?
If you currently own your own home in Sydney, you may be considering selling and upgrading to a larger property to accommodate the growing needs of your family. Alternatively, you may be looking to downsize to a smaller property, perhaps closer to the City. .One of the questions I get asked all the time is “should I sell my existing house before or after I purchase another?”.
Buying a new property first
Finding and purchasing the “right” property can be more difficult than selling your existing one. With the strength of the current market, your existing property is likely to sell faster that the time it will take you to find a new property. So if you’re in a strong enough financial position to purchase your ideal home while enjoying the security of keeping your existing property, then that could be the safest and most hassle-free way to move forward.
However, if you choose to buy a new home before selling your current one, you won’t be able to use the equity from the sale of that current property towards your new property. Furthermore, you’ll need to be financially stable enough to hold the two properties until you’re able to sell your existing home.
In order to more safely balance the two properties, you can consider the following measures;
- Negotiating a longer settlement time on your new property. This will provide you with more time to sell your existing home, while allowing you the security of knowing that you have somewhere to move once you’ve sold.
- Investigating the possibility of securing bridging finance in order to cover both properties until you sell your existing property.
The biggest benefit to buying first is that you don’t have to sell before you buy. There’s no time pressure for you to find your new home before settlement. You can take your time, do your research, visit inspections, take part in auctions, get a buyers agent on the case and find the property that you want not that you need.
Selling your property first
The obvious advantage to selling first is financial security. Selling first provides relief to the financial pressure of buying your new home as well as providing you with a more concrete budget.. The major negative to this method is timing. The perfect scenario involves you selling your existing home and purchasing your new one as close together as possible to minimise costs. Of course, you can sell first and buy some time later but the storage costs and rent in the meantime can be costly.
Another ‘pro’ is that the buyer will have less leverage over you to lower your price expectations because you won’t be under pressure to sell quickly.. Furthermore, there’s less pressure for you to adhere to a deadline for the sale, so you can hold out until you achieve the price that you want for your property. A bridging loan won’t be necessary as you’re not incurring the new mortgage at the same time you’re paying your current one.
Like with buying first, you may still be best advised to delay your settlement for as long as possible to give yourself, or your buyer’s agent, time to find your new home.
On the other hand, selling first certainly has its downfalls. You could end up having to move out of your now sold home due to not finding your ideal property. This could lead to rental and moving costs that will continue to reduce your available funds for purchasing your new home. Furthermore, if you do find a property, you may have to make more compromises than you would have liked due to your time constraints.
Over the years, I have met a number of owners who sold first but then could not find the new property as quickly as they had hoped. In some instances, the time lag has been as much as 2 years. As Sydney property prices have increased by approximately 30% over the past 24 months, these buyers risk pricing themselves out of the market and ending up buying an inferior property.
Choose the right path with Buyer’s Domain
At the end of the day, there is no simple answer or a clear solution for every homeowner. Whether you choose to buy first or sell first is dependent on your unique circumstances and you should consider the pro’s and con’s of both along with an analysis of your financial position before deciding which path to take.
If you’re unsure about your next moves, get in touch with Buyer’s Domain today. Our property experts can help you to weigh up your best options to meet your needs. They will help you find, negotiate and purchase your new Sydney home and will make the entire process a rewarding experience. If timing is critical for you, it is worth noting that most of our clients buy within approximately 1 – 3 months.