Whether you should buy a new home before selling your current property has been a question since the beginning of the modern real estate market.
The answer depends on factors ranging from your risk profile, financial situation and market conditions.
As an experienced real estate agent in your neighborhood, I’ve been working with clients with different perspectives.
Some are prepared to take on a bridging or swing loan to buy their next dream before selling. Others are cautious but, having sold their home, enter a race against time to find their next property.
So, it’s essential you find an agent you can trust to maximize your current property’s value and quickly find the right home for your future.
This checklist explores the arguments for both approaches.
Buy first advantages
- You can take your time to find your next dream home.
- Because you’re not facing an accommodation deadline, you’ll likely use the time to find your perfect home rather than settle for one that meets some of your criteria.
- When negotiating a deal, you can also ask for an extended settlement period beyond the 4-6 week standard, to allow you to sell your current home and avoid a short-term loan.
Buy first considerations
- You can make a purchase contingent on selling your current home, but that’s unlikely to be a winning strategy if other buyers are in the picture.
- Owning two homes is expensive. Swing loans have a higher interest rate than conventional mortgages.
- You may not sell your home as quickly as anticipated. That may cause you financial stress.
Selling first advantages
- With a deal done, you’ll know how much money you can spend on your next home.
- You’ll avoid being exposed to two loans.
Selling first considerations
- If you don’t find a new home before you seal the deal, you may have to find rental accommodation. That can be expensive.
- You’ll feel pressed to find a new home as quickly as possible to avoid ongoing rental payments and the risk of losing any financial ground in a market recovery. This often results in a compromised choice.
- Market conditions tend to change quickly. If you’re renting, you’re out of the market, and prices may rise quickly, limiting your ability to find the type and size of property you anticipated purchasing.