Should I Buy or Sell My House First?

2nd June 2021

Should I Buy or Sell My House First?

It’s every homeowner’s dilemma and we hear it almost every day - should I agree to sell my current house before I look for one to buy? As a seller, it can be frustrating to learn that they have someone interested in their house, but the buyers still have to go through the process of putting their own house on the market.

The question is a tough one and we don’t have a definitive answer for you, with much of it coming down to your personal situation, why and when you want to move.

Our South Hams estate agents have looked at both the advantages and disadvantages of buying or selling your home first to help offer a more rounded view of the subject, hopefully making your decision a slightly easier one!

Advantages to Selling Your Home First

‘Selling first’ generally means that you have accepted an offer from a willing buyer. It doesn’t mean that you will need to have moved out of your own home before looking for a new one! Your sale will effectively be subject to you finding somewhere to buy.

Agreeing to sell your own home first puts you in a perfect buying position to help find the house you like. It puts you in an excellent position to not only be able to view properties but also to put in an offer.

What’s more, it puts you in a position of strength to negotiate hard on both the price and any terms attached. It makes you a very credible buyer, one who must be taken seriously when offering. When you find yourself in a situation where you ‘need’ - as opposed to ‘want’ - to sell, you immediately weaken your negotiating position.

Being able to advertise your own property as having ‘no onward chain’ will help you stand out and increase the saleability of your property.

If you’re not under pressure to sell, it means that you can stay at the price you like and wait for the right buyer to come along. Once you have agreed to sell, you then know exactly what money you have to play with, so, can be sure as to how high you can offer on your next home.

Your seller will take their property off the market and mark it as ‘sold’ online, once terms are agreed with you, as you have agreed to sell yours and your chain is complete. It is essential that you make ‘having the property you are buying taken off the market’ as part of your negotiations.

If it were allowed to be left on the market ‘for sale’ you run the risk of the seller being tempted with a higher offer, should one come along - we call this being ‘gazumped’.

Disadvantages to Selling Your Home First

Once you have decided that you’d like to move, it’s hard not to start looking at the homes that might be available. If you then spot your dream house and you’re not in a position to buy, it can be very disappointing indeed.

In an attempt to get the maximum possible sale price for your home, you may turn down early offers, that could turn out to have been very acceptable had you already found a home to move to.

There is an increased risk of ‘buyers’ remorse’; the pressure to find a new home may cause you to make a poor buying decision.

The market may change during the time that you take to sell. This may mean that prices keep rising and the property that you could have afforded a few months ago is now receiving offers above what you are willing to spend.

If you do agree to sell your house but cannot then find one that you would like to buy, you may find yourself having to move into rented accommodation. This is often a big upheaval and could incur hidden additional costs such as putting some of your belongings into storage. However, this could be a good move if you feel you have secured a fabulous sale price on yours and do not want to let an opportunity slip through your fingers. It also puts you in the very best of buying positions when you do eventually find your next one.

Advantages to Buying a Home First

There are no advantages of this in the current really busy, sellers’ market! You will find it very difficult to move if you try and find first! However, in a normal, more balanced property market, things are slightly different.

With no buyer putting on pressure for you to move out, you’re free to view other properties at your leisure. This might mean exploring different ideas and locations, ages, and types of houses. We often find that buyers will view houses that they may not have first considered but find that this adds an extra dimension to the loss of ‘wants’ from their new home.

You might have already spotted your dream home before you decided to sell. If it’s what you really want, then securing it with a good offer might make all those dreams come true!

If house prices are rising or offers are more often than not being accepted above and beyond an asking price, then now’s the time to jump in with both feet. After all - things will only get more expensive.

Most people need access to the money tied up in their own property to assist with the purchase of the new property and most mortgage lenders won’t allow you to run your new mortgage at the same time as your existing mortgage.

Disadvantages to Buying a Home First

If you find a house that you really want, then you’ll be under a lot of pressure to sell your own. Not only can this be extremely stressful, but it also may mean having to accept an offer that is below what you might originally have wanted.

In extreme circumstances, buyers will complete on a purchase before they’ve sold their own. This can sometimes only be achieved with a second mortgage or a bridging loan or, of course, the buyers have come into some money and have cash! This can be very stressful and financially risky, particularly if the market changes or the sale of your house falls through.

Letting your house is another option to try and put yourselves in a better buying position. The reality is that you would not be letting tenants move in until you move out so, at the time of wanting to view or offer you would still be a buyer who needs to let their property before being able to proceed with a purchase.

Letting can lead to damage from tenants, added pressure and would also have to be done for a minimum term, which you may wish to break if the situation becomes too difficult, but would not be able to. Also, not everyone is a natural landlord. There is so much red tape. For example, just during the pandemic, there have been 47 new items of legislation that apply to letting your property!

If you commit to the purchase in a cooler market and don’t sell you could find yourself in a breach of contract situation which can be very expensive. But don’t worry, please remember your solicitor would not let or advise you to exchange contracts on your purchase if you do not have a buyer on your own property and can exchange contracts for the sale of that at the same time – that would be madness!

Above all, the most important thing is ‘transparency’ when you agree to sell your home. Your estate agent needs to ensure that your buyer is very clear that they are waiting for you to find your next home. They need to know that you may not find one for, not just a week or two, but it could be a month or two.

Your agent will tell you that it is not just about ‘selling’; it is not just about selling at a fantastic price; it is, most importantly in the current climate, finding the right buyer for you – this means the timescale HAS to be discussed. Your agent must manage the expectations of both yourself and your buyer.

If a particular buyer wants you out in 6 weeks and you need to find first, then this is not the right buyer for you. You would need a buyer who is in rented accommodation, who is happy to just sit back and wait for you to find. This means that you don’t feel pressured to find a property and your buyers know that there will be a delay.

Does this help you to decide on the next steps for you? Get in touch with our team to discuss your options and explore what’s right for you - we’re always happy to help!