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Should I Sell My House First of Buy First?

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RESOURCES - Sell my House:
Should you sell your house before buying or buy and then sell?
Unfortunately the UK house selling process is far from perfect and there are risks associated with both scenarios.
Which option you should go for really depends on the state of your local market.
For example, here in London there is a serious shortage of homes to buy and so many sellers would be foolish to sell first (they'll just make themselves homeless).
However, what's happening in London is abnormal and may have absolutely no relevance to your situation.
All things being equal, there is usually more benefit to selling first and then looking to buy. This article explains why!
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Why Sell My House First?

Reason #1 - You'll be in a strong negotiating position when buyers start making you offers. It will be easier for you to sell for the best price.

This is true because:

  1. Whenever you sell anything, the best position to be in is when you're least desperate to sell.
  2. If you've not yet fallen in love with a new house - had your offer accepted - need to proceed quickly, you can't be pressurised into selling before the right offer comes your way.
  3. You'll be able to keep control over the pace of your sale.
  4. It won't matter if your house doesn't sell as quickly as you thought. You remain free to hold out for the best price.

Reason #2 - You'll be in a stronger negotiating position when you start making offers on your new home. You'll be a vendor's preferred buyer.

This is true because:

  1. You'll be the buyer without the nightmare of a chain attached (i.e. The buyer ready and able to proceed - the vendor's safe bet).
  2. A seller will gladly take their property off the market if they receive a decent offer from you.
  3. If they are trustworthy, you'll no longer have to worry about being gazumped.

  4. You'll probably be able to pay less for the house than a buyer that still has a property to sell.
  5. With money in the bank from your sale, you can have 100% confidence in your budget.

The Risks of Selling a House First

Risk #1 - When house prices are rising fast, selling and then taking ages (say 3-4 months) to find somewhere new can spell disappointment.

In a fast moving market with strong price growth you may end up not being able to afford as much house as you first thought.

The worst-case scenario is that you may not be able to get back into the property market at the same level (i.e. You can't even afford to buy your old house back).

Having said that, at the moment interest are quite high (maybe even still rising) and outside of London house price growth is slowing.

This all reduces the risk of taking your time over finding your new home.

Risk #2 - If you sell your house and can't find a new one, you may have to rent (or stay with family) until you do.

Most seasoned sellers don't mind renting. Once you've been part of property chain renting is a far less stressful option.

There is no shortage of good quality rental accommodation across the UK. It's pretty easy to find a short-term let at a reasonable price.

Having to get the removal men in twice used to be the big turn-off. These days it's not such a big deal.

Most decent removal companies will take your belonging and store them for you while you rent (at a very reasonable cost).

When you find you do finally buy they'll get your stuff and bring it to your new home.

If I Sell My House First I Really Don't Want to Rent!

In this case you have to make it clear to buyers that you'll only accept an offer on the condition that can you find a suitable property to buy.

Ask yourself how much time you'll need. Then try and agree that period with your buyer.

In return for their patients, you'll take your house off the market and promise not to sell to anyone else.

In legal parlance this is called a "Conditional Offer Acceptance". It can be a gentleman's agreement of you could speak to your solicitor about drafting a clause into your sale contract.

What Could Go Wrong?

The main thing is that you may not find a house within the time period you've agreed. Or you feel that values have moved on since you first agreed a price.

In either case, you and your buyer need to sit down and renegotiate.

This is where a good conveyancing property solicitor will prove invaluable and make you thankful that you didn't go with the anonymous bucket-shop outfit you saw on the web.

What if the Buyer Won't Renegotiate?

Unfortunately, there's nothing you can do but put your house back on the market and start again.

It's a hassle but it's better then selling for less than you deserve.

Two Tips for Selling a House First!

Tip #1 - Do your Research!

Before you put your house up for sale, make sure you have answers to the following questions:

  1. Do you know where you want to move to?
  2. Do you know what kind of property you're after?
  3. Are you sure that kind of property often comes up for sale?
  4. Is that kind of property within your budget?
  5. Are you pre-approved for a mortgage?

If you can answer all five questions, you're closer than you think to buying your new home.

As soon as you start getting a steady stream of positive viewings get out there and start house hunting in earnest.

Tip #2 - Get a Good Conveyancing Solicitor!

By good we mean:

  1. Someone you can talk to.
  2. Someone that will take the time to understand your personal situation, timeframes and constraints.

Experience tells us that there aren't many good conveyancing solicitors out there but if you find one they'll be able to control the pace of your transaction.

They can speed things up when needed but more importantly, they can slow things down if you need more time to find your new home.

When you sell a house, your conveyancing solicitor (not your estate agent) will be your greatest helper.

The Risks of Buying Before Selling

Risk #1 - You'll be in a situation where you're most vulnerable to being gazumped.

If you don't believe me just ask yourself this, "Would you take your house off the market for a buyer that still had a house to sell?"

Risk #2 - You may have to pay over the odds to secure the house you want.

This is because your offer won't be as attractive as the one from a chain-free buyer.

Risk #3 - If you need to take on a bridging loan (to complete the purchase) you potentially expose yourself quite serious financial risks.

Typically, repayments on a bridging loan facility are between 0.75% - 1.25% (of the loan amount per month).

That can start to add-up quickly.

It can be crippling if you can't shift your house and end-up having to pay-off your current mortgage and the bridging loan for any sustained length of time.

Anyway, I hope we've given you some food for thought and now have a better idea about whether to sell your house first or buying first.

RESOURCES - Sell my House:

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