FINE & COUNTRY THE RIGHT ORDER
What should you do first, when considering moving: buy or sell? Jonathan Handford from Leamington Spa discusses what to consider when deciding on the right order.
The answer to whether a property owner should look to buy first and sell their current property later, or sell before looking for a new home will largely depend on their circumstances and unique situations. There is no one-size-fits-all, always-right answer. There are a few aspects that need to be considered that will influence this decision.
Naturally, the biggest one of these factors is the financial options available, but the local market conditions and the owner’s feelings about moving and flexibility around living circumstances – for example, being willing to move into interim accommodation, between selling and buying – will all come into play.
Here are three considerations homeowners should bear in mind before deciding on how best to proceed:
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FINANCE Only a small percentage of buyers can purchase a property with cash. Most are reliant on mortgage providers to obtain the necessary finance. This means homebuyers who are upgrading to a larger or significantly more expensive property may need the equity from the sale of their current home as a deposit.
In a situation where the sale of the owner’s current home needs to happen first, the owner could sell the property and then negotiate with the new owners to rent the property back from them until they find a new place or to have an extended settlement date. The viability of
important for a buyer to take the time they need to find the right home to fit their criteria. Finding the perfect home often takes more time than initially anticipated.
The optimal solution may then be for the property owner to stay in their current home while looking for another property. They can then make an offer to purchase their next home subject to the sale of their current home. This buys time to do property research and find the perfect home before making a move.
If the homeowner is in the rare position of not needing the equity from their current home, they can still run the risk of being stuck with two properties. While this may be fine in the short-term, it is generally not a long-term solution and contingency plans may be required.
LOCAL MARKET CONDITIONS While there are external factors that impact the property market, every neighbourhood is affected differently given variable aspects such as the type of home, price range and availability of other similar homes in the area. A property professional is a valuable source of in- formation when it comes to research- ing the specific factors that influence the property market in a particular area. The agent will be able to provide insight into how long homes are sitting on the market for on average, and how much similar properties are selling for. This informa- tion is vital when gauging time frames and possible equity from the sale.
From a buying perspective, a purchaser should research properties available in the areas they want to buy in, looking at all aspects of the neighbourhood and elements that may influence their decision.
this option will
depend on how eager the new owner is to move into their newly purchased home. Another option could be for the seller to find interim accommodation with family members, friends or a short-term rental. Other factors need to be considered with this, like storage for unnecessary bulky items or spare furniture.
Sellers wanting an advance on their home equity can opt to have the money bridged before the sale of the home is concluded. Bridging finance is based on the equity available on the property, the seller’s credit record and the expected cash inflow.
While having the equity readily available is a pro, the con is that a temporary living arrangement may force a buyer into making a faster and less-considered decision than they should. It is
RISK AND EMOTION Regardless
of whether the
homeowner decides to sell first, or buy and then sell, there is an element of risk, whether it’s the risk of owning multiple properties, or none for a certain amount of time. Ultimately, the answer should be based around the financial options available, along with the local market conditions. Either way, the homeowner will need to be prepared and have a plan in place to deal with the consequences of these decisions.
For advice on selling or buying property, please contact Fine & Country Leamington Spa on 01926 455950 or visit
www.fineandcountry.com/uk
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THE MIDLANDS PROPERT Y GUIDE F INE & COUNTRY
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