To sell or to buy first? That is the question.
2nd June 2021
2nd June 2021
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? What if I can’t find one that I like but I’ve already agreed to sell mine? Could I pull out later? Could I be homeless? Should I go into rented in the meantime? I don’t want to let my buyers down? – I’m not that sort of person!
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.
During the pandemic it was often the case that homeowners were unwilling to have people viewing their property unless they were already in a position to buy. It was a way of limiting the risk of Covid infection but we believe that this is something that will continue.
The question is a tough one and we don’t have a definitive answer for you, but we can advise you about the pros and cons. Much of it is really about your own personal situation, why and when you want to move.
The important thing to remember though, is why a seller has an estate agent acting on their behalf in the first place. An estate agent has to present their seller with the very best buyers in the market first; from cash buyers with no chain, all the way down to those who haven’t even begun the process of placing their property on the market. If you were the seller, which buyer would appeal to you the most; chain-free or nothing to sell, house under offer, property on the market, but not yet under offer or home to sell, but not yet listed…?
Agreeing to Sell your own house 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 prior to 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 ‘no onward chain’ will help you stand out and increase the salability of your property.
It will work to your advantage in this fast-moving market. At the moment, property is selling very quickly indeed and therefore, you’ll be a ‘no chain’ or ‘hot buyer’ in a competitive situation. You’ll be shown properties as they hit the market and having the luxury of choice, instead of simply waiting for what has been left over. You will, or should, receive calls from estate agents when a new property hits the market prior to seeing it on one of the property portals.
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’ on line, 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’).
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 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 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.
There are no advantages of this in the current really busy, sellers, market! You will literally never move if you try and find first!
However, in a normal, more balanced property market……
With no buyer putting on the pressure for you to move out, you’re free to view other properties at your leisure. This might mean exploring different ideas and locations, age and type of house. 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 lost of ‘wants’ from their new home.
You might have already spotted your dream home before you decided to sell. If its 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 n 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.
If you find a house that you really want (which you won’t with the flavour of the current market) 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.
Going back to how an estate agent works (on behalf of the seller) you are going to be introduced to the property last every time. The chances are, that by the time you become aware of the property, it will be under offer, or, have so many viewings booked on it already from ‘proceedable buyers’, that they are accepting no further viewings
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. Did you know that, just during this 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 advice, you to exchange contracts on your purchase if you do not have a buyer on your own property and are able to 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 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, perhaps, 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 and your buyers know that there will be a delay.
Does this help you to come to a decision about the next steps for you? Give our team a call to discuss your options and explore what’s right for you. We’re always happy to help.