Should I sell my house before buying again, you ask?
Yes, unless you have loads of spare cash or enormous emotional and mental strength.
Even though you probably knew the answer to your question, when the itch strikes to move to a greener pasture, the urge to scratch it can be so strong that you can lose sight of your priorities—and your budget.
If you’ve been out every weekend looking at all the fabulous homes on offer, even though yours has not yet sold, you’ve probably convinced yourself that you’re doing research, merely window-shopping.
The danger of window-shopping is that sometimes you end up with new windows!
Before you make an impulsive decision to sign a contract on a new house, ponder the following points on why it makes sense not to do so.
Selling under pressure
The problem for the majority of those who buy a new home before selling their old one is that they need bridging finance to cover the shortfall until the original property sells.
This means that until they are able to pay out the bridging loan (on the sale of their old home), they will have to pay interest on finance for both properties.
If the time the original home takes to sell drags on, this can prove to be very expensive and put family finances and relationships under a lot of pressure.
This creates a sense of urgency to sell that may cause you to accept a lower offer than you would otherwise have been prepared to, meaning that you lose more money on the changeover.
If you are desperate not to miss out on buying a particular house before yours has sold, it may be possible to negotiate a contract with the seller that includes a clause to make the purchase conditional on the sale of your existing home.
While this can eliminate the necessity for bridging finance, such clauses are usually short term (sometimes only weeks, because there are other fish in the sea), which creates yet more pressure to sell your old home.
The problem is that if you are desperate to sell you lose your bargaining power, giving buyers the upper hand.
Putting the horse before the cart
If you do the sensible thing and sell your home before purchasing another, having cash in hand, as it were, you will be in a position of strength when making offers for new homes.
I fully understand that some people get nervous at the thought of not having a place to live, but selling first and buying second can mean getting a higher price for your old home and paying a lower price for your new one, because you are under fewer time and financial pressures.
One consequence of this strategy is that you may have to move twice in a short period of time, but if you do need to rent between permanent homes, at least you are not likely to need to unpack everything you own.
If, for the short term, you are able to rent furnished accommodation or stay with friends or family, you have the option of storing most things except your personal belongings to reduce the fuss and moving expenses.
Sell my house before buying? Still not convinced?
Over 45 years McGrath Real Estate has worked with clients from all walks of life, from first-home buyers to those who own multiple luxury homes.
We’ve seen all there is to see in the behaviour of buyers and sellers, including those who have found themselves under stress because of making impulsive decisions and those that have benefitted as a result.
Talk to us about your plans for a new home and we’ll put our considerable expertise at your disposal to help you achieve them with the lowest possible element of stress.