If you are thinking about moving home, an important decision is to determine the timing of selling your current property and starting the search for your onward purchase.
Basically, you have a number of options:
- Sell your current home first.
- Start your home search once you have found a buyer for your current property and it is ‘under offer’.
- List your property for sale at the same time you start your home search.
- Wait until you find your onward purchase before you put your property on the market.
Each of the above alternatives are viable strategies, and each has its own advantages and disadvantages. However, it is without doubt that certain strategies will put you in a stronger position as a buyer and as a seller. The right strategy will really come down to your personal circumstances and preference.
Strategy 1 – selling your current home first
Selling and completing on the sale of your current home before making an offer on an onward purchase will undoubtedly put you in the strongest position as a buyer. This is because:
- You should have certainty around your budget for your onward purchase.
- Having the money in the bank or a mortgage offer agreed in principle, means that you eliminate any financing risk for the seller of your onward purchase i.e. it reduces the risk that the transaction will not complete because you cannot borrow enough.
- You can get the rest of your team including solicitors and surveyors in place. Again, demonstrating that you are ‘ready to go’ makes your offer that much stronger.
- You should be able to proceed quickly through the conveyancing process and to completion.
- You will be ‘end of chain’, which reduces the complexity and risk involved.
Another key advantage of selling your home first is that you will not feel ‘under pressure’ to accept the first (and potentially a lower) offer for the sale of your current home. You can hold out to ensure that you get the full value of what your property is worth. The reverse to this also holds true. That is, if you are a strong buyer and the seller of your targeted onward purchase is keen to progress quickly, you might be able to negotiate a discount on the asking price.
Finally, as a strong buyer, you have less chance of being gazumped latter in the process by someone offering a slightly higher price.
The biggest drawback with this strategy is that you will either have to move in with relatives or into rented accommodation while you search for and complete your onward purchase. It also means that you will have to move twice. All of this amounts to more cost and higher stress and aggravation.
Strategy 2 – Wait until your current home is under offer
Waiting until your current home is under offer before you get serious about your search for your onward purchase is a very common strategy. This approach again puts you in the position of being strong buyer. How strong a position that you will actually be in will come down to how advanced your sale is and how complex the overall chain is.
The advantages of this strategy are that;
- Having received an offer on your current home, you should now know exactly what your budget is for your onward purchase.
- If your onward purchase is likely to be more expensive (i.e. upsizing) you can agree a mortgage offer in principle with a lender in advance of making your offer.
- Having already sold your home subject to contract, you will not be under pressure to accept a low-ball offer.
The key disadvantage of this strategy is that even though you are a strong buyer, there is still a degree of ‘uncertainty’ to your sale. It should be remembered that following acceptance of offer, property transactions still have a 30-40% chance of ‘falling apart’ and failing to compete. This risk increases if there is a complex chain in place. So, the sellers of your onward purchase will still perceive that there is an element of ‘risk’ to your offer.
Strategy 3 – List your current property for sale at the same time you start your new home search.
Again, this is a very common strategy.
If you sell your current property before you find somewhere you want to buy, then you basically revert to strategy 2 above.
In the event that you find somewhere that you want to buy ahead of selling your current property, then unfortunately the strength of your offer will be less than under strategies 1 and 2. The sellers of the property you wish to purchase (and their agent) will perceive more risk involved in your offer. This is particularly the case if your property has been on the market for a long period of time or it is clearly overpriced.
The key advantage of this strategy is that by already having your property listed, you can demonstrate that you are a motivated buyer.
The drawbacks to this strategy are that if you find somewhere to buy before you receive an offer on your current property, you might feel under pressure to sell for a lower price. Also, you do not know how much you will receive from the sale of your current property, so you cannot determine your final budget for your onward purchase.
Strategy 4 – Find your onward purchase and then list your current property for sale
This strategy tends to play out quite often, but is less than ideal. It mainly happens where people are ‘thinking’ about a move and they see a property they ‘fall in love with’ and then have to do whatever they can to get themselves and their current property ready for sale.
Unfortunately, this strategy puts you in the weakest position as a buyer and can also add pressure to the sale of your current home. Ideally, this is a situation that you want to avoid, but in reality, it does play out quite often.
A significant danger in this strategy is that you will feel very rushed to try to sell your current home. This means that:
- You might not take the right amount of time to get your home ready for sale, thereby reducing the chances of achieving the best price.
- You could be tempted to accept the first offer you receive, which might not be the highest value you can get for your home.
There is also a higher risk that:
- You are gazumped latter in the process by someone offering a slightly higher price or with a more ‘solid’ offer.
- The seller of your onward purchase loses patience waiting for you to sell and withdraws from the transaction.
If the seller of the property you would like to purchase has just started their own search for a new home, then are likely to be more willing to wait for you as you try to sell your home. But, if they have already found their onward purchase, they are unlikely to want to wait around as you to get yourself and your home ready for sale.