It’s a question that often comes up when looking to move to a new home. While there are certain obvious advantages of selling your existing home first, there can also be benefits when the situation is reversed.
Edison Property Director Claude Iaconi explained the pros and cons for both to help individuals decide what is best for them.
“We are in a market where it makes sense to upgrade to a better home because prices are cheaper than they were at the last peak of the market back in 2014. Hence substantial savings can be achieved. And sellers can be more motivated so if you’re in a strong financial position when making an offer, the better your chances of securing the property and getting a great deal in a buyers’ market,” Mr Iaconi said.
“Sellers generally consider the offer first in terms of price, then finance conditions, settlement date, and any other conditions that are a hurdle to the contract being unconditional. Whilst a subject to finance clause is not a deterrent, a cash offer will always be more attractive as the seller would then know that their property is sold, and can then make their own future buying decisions with confidence.”
On the other hand, it can work for many to buy before selling. “Before you decide to buy first or sell first, have a look around at what is on the market and see if there is anything that you would be prepared to buy,” Mr Iaconi said. If you are particularly fussy and find reasons not to buy all of the houses you inspect, and you conclude it will be difficult and time-consuming to find the house you require, then selling first may not work for you. Also, if you are financially capable of buying your new home without having to sell your existing home first, then it may be easier to buy your home, make any necessary improvements, move in and then tidy up your old home before selling or renting.
If you decide to sell before you buy, the first thing to do is set a realistic sale price for your home based on an accurate market appraisal by a leading local agent, and consider obtaining pre-approval for a loan based on the minimum amount of cash you could expect from the sale.
When it comes to ‘subject to sale’ offers, again, there are things to consider for both the buyer and seller, though Mr Iaconi said he likes the concept of a subject to sale offer.
“It gives a nervous buyer a genuine chance to make an offer, while still maintaining the security of testing the market to ensure they can achieve a reasonable selling price for their property,” he said.
“Just be mindful that if you want to purchase the dream home you’ll have to be serious about pricing as there is a limited time frame to achieve your sale”.
He added that “on the other hand, the seller has achieved a ‘half sale’, yet still has the opportunity to continue marketing to search for a better quality offer whilst the subject to sale buyer is trying to sell their own home so disappointment is part of the equation.”
One strategy that Mr Iaconi adopts successfully for his sellers is the "rent-back option". He explains that "this is where you find a buyer who will allow you to rent back the property after settlement for a defined period of time. It means you are cashed up, you become a tenant, it allows you to search for the right home without any pressure and you have put yourself in a superior negotiating position for your next purchase. The rent back arrangement is written in to the sale contract so the seller has certainty and comfort in that he has a roof over his head until they buy their next home".
In the current market with fewer houses to choose from, it really is up to the individual as to what best suits their circumstances.
If you’re thinking of making a move and not sure which direction to take, Claude is available anytime to provide 25 years experience and intelligent advice to help you achieve your property goals with minimal stress. Make your next move a smooth one....contact Claude on 0412 427 877 anytime