I recently talked to a few families who moved home. Both families received good prices for their houses and both managed to get the house they wanted to buy, however they did something slightly different from each other. The first couple, we will call them the Smiths, sold their own house first and then purchased. The second couple, for the sake of the article, The Joneses, bought first and then sold their own home. So examining both situations I wanted to find out which was the best option, the most cost effective and the least likely to cause stress.
In The Smiths case, they sold their home first. They achieved a very respectable price for the house, more than they had expected. This extra meant they knew exactly how much they had to spend on their new home. Their dealings with the bank were straight forward as everything was there well in advance of them making any offers. As a result of the easier financial situation the stress involved with dealing with banks was also reduced.
The down side for the Smiths was that it took quite a bit of time to find and secure the house they wanted to buy. This led them to have to rent accommodation for their family. Although this was not overly expensive, it was still an expense. They also paid for storage of their furniture while they searched for a home plus they had to pay the removal company twice to move their furniture.
On the other side of the fence, the Joneses, purchased their new home first. This meant they could move directly from the old home to the new one without any accommodation bills or extra storage or removal bills.
The Joneses found that it took a little longer than expected to sell their old home, mainly due to the market conditions. This forced them in the situation of have to pay a double mortgage and almost pushed them into a bridging loan, which nobody really wants to take on. All these worries cause them a great deal of stress and almost made them drop the price of their home to get a fast sale. Lucky for them they came out the other side okay, but what if they hadn’t.
Both these situations came with their own amounts of stress and financial worries. So which do you choose, sell first, but first? There seems to be no perfect rule it all depends on your situation, how are your finances? Can you get free accommodation etc. However there is one thing you should be aware of and that is the state of the current market.
If the market is currently a sellers market, which means there are more buyers than houses available, then it would be prudent to buy first and you can be pretty sure your house will sell fast.
In a buyers market, where there are more properties than buyers, it would be a wise move to considering selling first, you will also be able to determine exactly how much you can then borrow as you may not achieve your intended goal price when selling your home.
Of course the ideal solution would be to settle both the sale of your old home and purchase of your new one on the same day… Aw a perfect world.
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