Buying and selling at the same time
To buy first or to sell first, that’s the question! Indeed, many home-owners who are looking to move to a new home, whether they are upgrading or downsizing, ask themselves this same question.
How does a simultaneous settlement work?
Many home-owners don’t want to sell their Sydney property until they can move into their new property. However, many people can’t afford to pay for their new home until their old home has been sold.
Pros and cons of selling your home before buying
The obvious advantage of selling your current Sydney property before you buy a new one is that you have the money to pay for your new home and won’t need a bridging home loan. Also, since you already have the money, you know what your budget is.
On the other hand, if you sell your home first before you buy a new one, you may have to find a temporary place to live before you can move into your new home.
Pros and cons of buying a new home before selling your old one
If you buy a new Sydney property before selling your existing one, you won’t need to find a new home quickly and only need to move once. However, unless you have extra money saved for the new home, you may need to get a bridging home loan from your mortgage broker, bank or financial institution. In addition, you may need to accept a less than satisfactory offer so that you can settle for your new home.
How to make the simultaneous settlement easier
When you have a simultaneous settlement, the settlement for the sale of your old home and the purchase of your new one happens simultaneously. It takes some planning to make this Sydney conveyancing transaction a successful one. Your best bet is to get assistance from a property lawyer who specialises in Sydney conveyancing transactions involving simultaneous settlement.
You will need to consider the settlement terms for both properties. You can sell your home with a long settlement of up to six months. You can ask your property lawyer to include a clause in the contract that allows you to move the settlement forward with a 4-week notice. When you find a new house, try to line up the settlement of both properties. If you can’t find a new house before you have to settle your old one, ask your buyer if a leaseback option is a possibility.
As an alternative, you can buy a new property with a long settlement period. Again, ask your property lawyer to include a clause in the contract that allows you to adjust the settlement with advanced notice. Overall, try to sell your existing home and match the settlement date.
Should you sell first or should you buy first? That’s a question that many property owners have in mind when they consider moving. When buying a new home and selling your current one, there are many things you need to consider. Having a good strategy in place will certainly pay off.
Buy Before You Sell
There are times you may want to buy a new property before you sell your current home. For example, if you have accepted a job in another state and have to relocate, you may not be able to wait until you sell your home before you move. In this case, you’ll have to buy a new home before you sell your current one.
Sometimes you find your dream home before you sell your current one, or even before you consider selling it. Buying before you sell may be the only way to ensure that you don’t miss out on the property. Also, you may also want to buy before you sell in a buyers’ market. You’ll have a better chance of getting a good deal on a new home.
There are some disadvantages of buying before selling. Unless you’re financially capable, you may need to have bridging finance to pay for your new home. You’ll end up having to pay off the loan of two properties until you sell your current one. If you don’t want to get another loan for the new property, you will have more pressure to make a sale before you have to finalise your purchase. You may have to accept an offer that is below what you want to sell the property for.
Sell Before You Buy
Selling before buying is generally more advantageous. The main benefit is that you’ll have less pressure to make a sale. You can take your time and only sell when the price is right. Also, once you sell your current property, you’ll know exactly how much money you have and what kind of new home you can afford.
Some real estate agents may allow you to include a clause in the contract for sale stating that you’ll only sell the property after you buy a new home successfully. Alternatively, you can ask for a contingency period that gives you more time to buy a new home. If you can’t find one by the end of the period, you can cancel the sale.
Another option is to create a clause in the Contract where the deposit paid in your sale will be released to you for the purpose of paying the deposit on a new property you are purchasing. In this situation, you would also try to arrange that the settlement of your purchase and sale occur simultaneously.
Selling before buying isn’t without disadvantages. If you can’t find a new home after selling your current one, you’ll have to make temporary housing arrangements, such as renting a home or living with a relative. If the buyer of your current home doesn’t need to move in right away, you may be able to rent the property back from the buyer until you find a new home.
If there is a time gap between selling your current home and buying a new one, you may suffer financially in a rising real estate market. In other words, you may have to pay more for a new home.
Also, if you arrange for the settlement of your purchase and sale to occur simultaneously, should something go wrong in one area (for example, your purchase), then this may affect you being able to proceed with your sale.
Since every seller’s situation is different, you should consider all your options before you decide on a strategy.
DISCLAIMER: The content of this publication does not constitute legal advice and is intended only to provide a summary and general overview. We do not guarantee that it is current. You should seek specialist legal advice or other professional advice about your specific circumstances. Your access to this publication is not intended to create nor does it create a solicitor-client relationship between you and Unified Lawyers.
If you require any assistance with simultaneous settlement, please feel free to contact Unified Lawyers on 1300 667 461.