The decision on which way to tackle the move to the next property often causes so much uncertainty for people that it totally paralyses them in their currently unsuitable home. On one hand if you buy first there is the uncertainty of whether your current home will sell and for how much. On the other hand if you sell first there is also uncertainty of whether there will be an appropriate home out there for you.
Which way will cause you the least stress, put you in the best financial position and mean you have made the right decision in getting the right property?
Although the decision will mean a different set of circumstances for you, there is no single answer to this dilemma that most people considering a move will face. There are however some things to consider to figure out which way will be the best for you.
Try not to lose sight of the purpose of your move. Often people become so caught up in the decision itself and the many factors involved in the process that they end up doing nothing and living in a home that has become unsuitable. For example if your family has grown and you need more room, you must be realistic about this fact as it is not going to change and a move is inevitable. If the maintenance of the garden or the home has become too difficult to manage then the longer you leave it, the worse the problem will become and the more frustrated you will be.
Consider the financing: Do you have a deposit available to you to go out and buy your next home or is all your money tied up in your current home? You may be eligible to obtain a cash advance by using the equity (the value of your property minus any loan you have) in your home as security. Banks will lend against this equity so that you can be prepared with a deposit should your dream home become available.
What if my property has not sold or settled by the time my new home settles? Banks will often allow you a ‘bridging loan’ that will mean you can buy first and own both properties for a short while until your current home settles and you can repay it. Bank interest will need to be paid on the total loan amount however banks will often allow you to ‘capitalise’ payments on the loan so that the loan balance increases during the bridging loan period meaning additional loan payments are not paid during this period and are instead added to the loan balance. Contact your bank, or better yet shop around for loans in advance or speak with a broker to find out what your changeover costs will be. Many people get prepared with an approved bridging loan but find a suitable home and don’t end up needing it.
I won’t know how much I can get for my home until it sells: It’s true that the final selling price will be unknown until the contracts have been signed. This unknown selling price can be predicted by a good real estate agent with reasonable accuracy by taking in to account past sales, market conditions and using their expertise. Unfortunately some agents will overvalue homes to try to get the owner to sign up with them which can cause a range of problems. If you would like to buy first, it is therefore essential to employ a skilled agent with integrity that will be realistic about the likely value of your home. It is also possible that the eventual selling price of your home exceeds your expectations and you can end up in an even better financial position. This however may be a reason to sell first because you may find you can afford a better home than you expected if your expectations ended up being conservative.
What if I sell first and I can't find the right home? If your next home is going to be very difficult to find due to your very unique requirements it may be better to get prepared and wait until the right home hits the market. If you are wanting to sell first, you can always take a short-term rental and take your time to find the right home. Although this will mean making 2 moves and possibly moving furniture in to storage, it is a way to know how much money you will end up with and be not rushed in to buying.
How to be prepared for your dream home: Getting prepared will involve engaging a good agent to sell with who can give you the right advice on what repairs/improvements will need to be made to make your home ready to sell and for the best price. When your current property is ready for sale, as soon as you buy your dream home, your agent can ‘push the button’ and activate the marketing of your property. Not having your current property ready is possibly the biggest hurdle people experience that can paralyse someone from moving. A good estate agent will have a list of reliable tradespeople that can get all the jobs done quickly. Knowing which agent you are going to use in advance of when you need them will also remove the job of choosing someone suitable, avoid rushing this important decision and will mean you have someone knowledgeable to call on as needed. Please call me on 0407 040 706.
Keeping track of the market and values: Having your finger on the pulse in terms of what properties are selling for is an active job as the market can move quickly. Not being familiar with values can mean missing out on the right homes and underestimating or overestimating property values. Taking the time to know the market is worthwhile and will mean you will be prepared when the right home becomes available. You can keep up to date with values here.
Taking the leap of faith: Sometimes a great property hits the market when you are least expecting it and you want to have it! A good estate agent will jump in to action immediately for you and help you take the steps to fund the purchase and get your own home sale-ready in as short a time frame as possible. They will also recommend the right professionals for the jobs that you will need. i.e. Conveyancer, tradespeople, stylists, gardeners etc. It’s amazing what can be achieved when the clock is ticking!
There are only 2 ways to go about this move so don’t complicate it, they are to buy first or to sell first. Both ways have their benefits but the key is to be prepared, to be well informed and to surround yourself with people you can trust to make it happen with a minimum of stress. Get organised and contact your preferred agent today.
For all real estate related information or advice, contact the author Simon Wendt, Licensed Estate Agent at Hockingstuart Mentone on 0407 040 706.
