If you are thinking of selling your current home, you have an important decision to make. Should you sell your house before looking for one to buy? For most people, selling their current house while looking for a new one to buy is the most straightforward solution. However, doing this puts you into a property chain. While it seems an easier way to sell your current property, being in a chain of buying has its disadvantages.
This article explores the pros and cons of selling a property before buying a new one. Armed with this information, you are in a stronger position to make an informed decision. You will also get some handy tips on how to sell your home and minimise the risk of not finding a new one quickly.
Selling Your Home Before Buying — The Advantages
The primary advantage of selling before buying a new home is that you strengthen your buying power. Selling your home this way puts you in control of any negotiations. You don’t have to make a quick house sale and accept a below-par offer because you must move fast.
Another advantage is that you avoid the dreaded house chain. A house seller tends to give preference to potential buyers who are not dependent on selling their current property. You can enter negotiations as a cash buyer with a ‘proceedable position’.
For example, suppose the seller has a choice of two offers. One is yours, and they can avoid buying in a chain. But the other offer means the sale of their current property could be held up. In this case, you are in the strongest negotiating position. Therefore, it’s logical that the seller is more likely to accept your offer, especially as you have cash in the bank.
The fact that you already have the funds to buy the house — either cash or a pre-approved mortgage — means that the seller can make a quick sale on their property. Your strong negotiating position also minimises your chances of being gazumped by a potential buyer selling in a chain.
It is also important to remember that chain-free properties and chain-free buyers are more desirable when selling and buying a house.
If you want to find your dream home for the best price, selling before buying gives you two distinct advantages. First, you know exactly how much you can afford to spend on a new house. For example, you don’t have to worry about the selling price as your home is already sold. Second, you have time on your hands. As a result, you are in a stronger position to find the perfect house for an acceptable price.
In some cases, you may find you can afford a better house if house prices fall while you are house hunting. But, of course, one of the risks is that the housing market can go in the other direction.
The Cons of Selling Your Home Before Buying
What are the risks of selling your property before looking for a new one to buy?
The primary downside of this selling strategy is that you may not find a suitable property. The result could be that you are forced to rent until you find the perfect house. This is not only costly, but it could mean moving house twice — which is more expensive and comes with added stress.
Also, there is the possibility that house prices will rise after selling, giving your less square footage for your cash. This could result in not being able to afford the home you desire. Or you need to secure an additional mortgage.
How to Sell a House Before Buying a New One
Selling your house before buying a new one has many advantages. Although renting for a period of time can be stressful, you avoid buying in a chain and minimise the risk of gazumping.
Here are some handy tips on selling before you buy:
- Do research: It is vital to research the areas where you intend to buy. Get an idea of property prices and the health of the market.
- Sort out finances: Ensure that you have organised your finances so you can buy quickly. This means getting a mortgage pre-approved to increase the chances of your offer being accepted.
- Try to extend the selling process: To give you time to find a new home, try to extend the time between accepting an offer and exchanging.
- Be proactive: After selling your home, keep an eye on the property market. It also helps to engage with a local estate agent, so you are the first to know when a suitable property comes on the market.
If you’re looking to sell your house, you can learn more on our property sales page.