Buying or selling a home is a major undertaking and there are many variables that can complicate the process. If you’re looking to do both simultaneously, it’s important to be well-informed and well-prepared to help ensure a successful outcome. Our guide covers everything you need to know from navigating the housing market to coordinating your move-in and move-out dates. With our expert advice, you can make the best decision and achieve your real estate goals.
What is simultaneous settlement?
If you’re in the process of both buying and selling property, aiming for simultaneous settlement (also called a contemporaneous settlement) can be a smart move. Essentially, this means that the sale of your current home and the purchase of your new one will both take place on the same day. While it’s certainly not an easy process, it can save you time and money in the long run. Keep in mind that you may need to offer incentives such as lower sale prices and higher purchase prices to get all parties involved to agree to this approach. Working with an experienced agent who can help align your settlement dates is crucial if you want to make this happen.
Should I buy property or sell property first?
If you’re looking to buy or sell property, it’s essential to assess the current market to make informed decisions. In a rising market where prices are going up, buying first and selling second is a recommended strategy. This allows you to purchase at a lower cost and sell for a higher price, maximising your profits. On the other hand, if you attempt to sell your property first, you risk losing out on potential revenue if market conditions continue to improve. However, in a strong property market, buying first is less risky, and there’s a higher likelihood of quickly selling your old property. On the flip side, if you can’t sell your old home before settling on your new one, you may find yourself paying two mortgages, which can be a significant financial burden. It’s also important to consider the possibility of over-extending yourself when buying a new home, based on an optimistic valuation of your current property. Ultimately this decision requires careful consideration of your financial position and the current state of the property market.
Extending the settlement period
When it comes to buying and selling property at the same time, there are several factors to consider. One option to explore is extending the settlement period by 3 to 6 months, but this is only possible if both parties are in agreement. If you sell first, you can request an extended settlement as a condition of sale in your contract. This can be beneficial if your buyer is willing to wait, giving you time to find and purchase a new home before settling. On the other hand, if you choose to buy first, you will need to ask the seller to include an extended settlement in the contract. This is particularly helpful if you need extra time to find a buyer for your current property. An experienced agent can assist you in navigating these options and finding the best solution for your specific situation.
Subject your offer to completion of sale
It’s possible to buy first without the risk of two mortgages by adding the sale of your current home as a condition of sale in your purchasing contract. This means you won’t have to worry about finding a temporary rental in between homes. However, it’s important to have a skilled agent by your side to help you negotiate this successfully. With so many buyers out there, you’ll want to make sure your offer stands out and the seller is willing to accept your conditions. After all, the seller may be in a hurry to sell and may not want to wait for you to sell your home first. Trust your agent to help you navigate this process without the added stress of carrying two mortgages.
What are bridging loans?
When it comes to buying a new property, there are times when a bridging loan may be the perfect solution. If you’ve found your dream home but are still waiting to sell your current property, a bridging loan can provide the finance you need to make the purchase. Usually, bridging loans have shorter terms of up to 12 months and have the choice of variable or fixed mortgage rates. This short-term loan acts as a line of credit, allowing you to cover the gap between selling your old home and purchasing the new one. While most people sell their old property first, a bridging loan can be a helpful option if buying first suits your situation better. This involves fees and charges, so it’s best to speak to your lender to determine how this may affect your budget.
Using a rent-back agreement
If you’re looking to sell your home but can’t find a new place to live in time for settlement, a rent-back agreement might be worth considering. This agreement allows you to remain in your home as a tenant while giving the new owner possession of the property. You’ll be required to pay rent until you move out and provide bond and advance rent, but the agreement is negotiable. It’s important to note that a formal lease is required in order to make the arrangement official. So, if a bridging loan isn’t feasible and the buyer isn’t flexible on the settlement date, a rent-back agreement could be a viable solution to buying time while you search for your new home.
Common mistakes when buying and selling at the same time
Here are some of the most common mistakes made by sellers when trying to both buy and sell.
- Forgetting to make a plan B – whether that’s having some emergency funds, having short-term storage organised or preparing to stay with friends and family if needed.
- Qualifying for a larger home loan – it pays to get pre-approval as there are no guarantees of qualifying for that larger home loan.
- Overestimating your property’s value – always accurately value your property to avoid issues with overestimation.
- Using two different real estate agents – keep it simple! Choose one quality agent to handle both the buying and selling.
We know that buying a house while selling a house can be stressful and is a large financial decision. This is why it is important to understand your options and what is a suitable fit for you. Our experienced team can help you understand your options and take the stress out of financing your new home. Reach out to us today to find out how we can help.
Disclaimer:
Terms are subject to approved persons only. This information is true and correct as of 12/07/2023. All of the content above is general in nature and may not suit your personal needs, situation objective & goals.
