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 some advantages too.

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 disappointed by someone else coming along and rolling you out of the sale. 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 pressurized 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

• If you sell first, expecting to be able to buy quickly, you may be disappointed and instead have to rent for a time, which can prove 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.

Tips

• 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 and if you can both afford the area and find a property that suits your needs.
• 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 real 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 settling the sale this might give you enough time to buy a new place in the meantime.

Selling your home is not something you do every year. Prepare yourself properly by setting up the process.

Engage a real estate agent you get on with and one that understands your needs and wants. You can then plan the process. Prepare your property for sale. Decide what you want to do next and investigate the location and size to be sure your plans can be achieved.

Now present your home for the market and go to the market with a sales price and a marketing plan that is achievable and realistic and will attract the best buyers.

Once you get a buyer who wants your home, sign it up and go searching out your next buy. If it means moving twice because you have to rent, do it, because you will find greater satisfaction from being patient and having a little discomfort for a short period of time rather than buying quickly to achieve only one shift.

When you find your next home plan how you will live in it, what you will do to the property, when and how long before you move again. Keep you agent in the loop and allow them to advise and help you, they are the specialist.

Your property purchase and sales will be the biggest you make in your life so plan them to ensure you make them as profitable and as enjoyable and hassle free as possible.

Above all create a relationship with an agent you get on with as they will be able to advise you for your interests.

Have fun and you will be surprised how well you can do financially.

The information contained in this article is of a general nature and should not be taken as advice. It reflects the opinions of the writer only and does not necessarily reflect the opinions of New Zealand Home Loans.
 
Written by Pauliene van Strien

Pauliene is a Licensed Real Estate Agent with Mike Pero based on the beautiful Kapiti Coast. Having seen a fair bit of the world after visiting NZ she lost her heart to it and in 2014 took the plunge emigrated her with her husband. You can follow Pauliene on her Facebook page or contact her on pauliene.vanstrien@mikepero.com or 04 902 7800