Most people sell their current home at the same time as buying a new one, forming a property chain. Selling before you buy has risks, but it can also have great advantages
Advantages of selling before you buy…
· It puts you in a stronger position when buying. The seller you want to buy from would almost certainly prefer a buyer who has the cash in the bank (and/or a pre-approved mortgage) rather than enter a chain, where their sale is dependent upon you finding someone to buy your house.
· You are less likely to be gazumped. If you put in a decent offer the buyer is unlikely to take another if it means entering a property chain.
· You remain in control of the sale of your own house – because you won’t need to make a quick sale, you will not be pressurised into selling cheaply.
· Those with time on their side are usually in the strongest negotiating position.
· You may get a better price if you find a seller who is keen to move quickly.
· You will know exactly how much you can spend because you’ll have the money from your sale in the bank – buying your new home won’t be dependent on you achieving the expected price on your existing one.
· If prices are falling, then houses get more affordable as you wait.
Disadvantages of selling before you buy…
· If you sell first, expecting to be able to buy quickly after, you may be disappointed and instead have to rent for a time, which can prove very costly.
· If prices are rising fast, by the time you’ve sold your house and sorted out somewhere to rent, a new house will be much less affordable. For example, if you rent for a year, and prices rise by 10% in that year, then you will only be able to afford 10% less.
Renting can be stressful, but being in a chain, being gazumped, or feeling you’ve undersold can be worse.
· If you do sell before you buy, make sure as many things as possible (mortgage etc) are organized beforehand so you can buy quickly.
· Do your research before you sell. Decide what area you want to buy in, and what sort of property you want to buy.
· Keep an eye on the property market while you are selling just in case that perfect house comes along. You’ve got time so you might as well use it.
· Develop relationships with a number of estate agents before you sell, so that you get in there first with all good properties that come up for sale.
· Get your mortgage pre-approved. This will make you even more attractive to a seller.
· Try and slow down the selling process, by agreeing a longish period between agreeing an offer and exchanging, and between exchanging and completion. This might give you enough time to buy a new place in the meanwhile.