Should you sell or buy first? Whether you’re a growing family, moving for work or simply need a change of scenery, this is an age old question that almost every homeowner will face. The answer? It ultimately depends on your personal circumstances, the state of the market, and various other factors.
If you find yourself in this situation, we’re here to help! As leading real estate agents on the Sunshine Coast, we are going to walk you through the key considerations for both pathways. Let’s jump into it.
Option A: Selling First
Key Considerations
Getting an Appraisal: Before you list your home, it’s important to get an accurate appraisal from a trusted real estate agent. An appraisal gives you a realistic estimate of how much your home could sell for in the current market. Without this, you might overestimate or underestimate what your home is worth, which could affect your buying power when you look for your next property.
Finding Somewhere to Live: Selling before buying often means you’ll need to arrange temporary accommodation while you look for your next home. Whether you stay with family, rent an Airbnb, or find a short-term lease, it’s important to consider where you’ll live during this transition period.
Personal Possessions: If your next home isn’t ready when you sell your current one, you’ll need a concrete plan for your personal belongings. From clothes and household items to large furniture and appliances, everything will need to be moved or stored. Unless you’re lucky enough to have access to a garage or additional property for storage, you’ll need a clear plan for your belongings during the transitional phase.
Storage: Along with day-to-day possessions, you might need to store bigger items like outdoor furniture, tools, or seasonal decorations. Renting a storage space or garage can be a practical solution, but it’s another cost to factor into your moving expenses. However, the upside is that your belongings will be safely stored, allowing you to declutter your current home and keep it ready for inspections while on the market.
Establish Method of Sale: If you’re serious about selling your home, the next step is to settle on a method of sale, whether it’s an auction, a private sale or the off-market route. In this sense, you can always lean on the expertise of the selling agent or simply choose a method that you’re most comfortable with.
Risks: The main risk of selling first is that you may not find your next home right away. In a competitive market, buyers may be snapping up properties quickly, leaving you with limited options. On top of that, market conditions can shift—meaning that prices could rise while you’re searching, making it harder to afford the type of property you initially hoped for.
Potential Benefits
Available Funds: Once you’ve sold your home, you’ll have immediate access to the funds from the sale. This means you’ll know exactly how much you can spend on your next property and have a clear budget in place. Having the full proceeds from your sale in hand also gives you stronger negotiating power as a buyer, especially in the eyes of a lender.
No Need for a Bridging Loan: When you sell first, you avoid the need for a bridging loan, which is often required when you buy before selling. Bridging loans can be complicated and costly, as you’ll need to pay interest on two loans simultaneously—one for your new home and one for the old. By selling first, you sidestep the stress and expense of managing two mortgages.
More Time: Selling first gives you more flexibility and time to find your next home. Without the pressure of an impending deadline to sell, you’ll be able to take your time to view different properties and ultimately make a well-informed decision. This way, you’re not rushed into buying a home that isn’t perfect, and you won’t feel the pressure to compromise just because you need to close on a sale.
Less Stress: Selling first offers peace of mind. Via this pathway, you won’t have to worry about managing two properties at the same time or simultaneously juggling two mortgages. Once your home is sold, you can focus solely on buying your next property without having to keep your current home market-ready or deal with the logistics of another sale.
Ready to pursue a sale? We have knowledgeable real estate agents in Caloundra, Forest Glen, Nirimba, and every corner of the Sunshine Coast. Call us now, and let’s chat about your next adventure!
Option B: Buying First
Key Considerations
Dedicating Time for the Property Search: If you choose to buy first, be prepared to dedicate significant time to searching for the right property. Depending on the market, this process could take weeks or even months. It’s important to have a clear idea of what you’re looking for in a new home and to schedule time for open houses, inspections, and negotiations. The more prepared you are, the smoother the buying process will be.
Projected Costs: If you’re buying a new home before selling your current property, always do your best to develop an understanding of the costs involved. You’ll need a deposit, which is typically 10% of the property’s value, along with stamp duty, legal fees, and potentially mortgage insurance if you’re borrowing more than 80% of the home’s value.
Ratio/Price Difference: If the market is rising, buying first could allow you to secure a better price before property values increase further. For example, if you’re selling a 3-bedroom home to move into a small apartment or unit, you may be able to develop quite a nice safety net. If the inverse occurs, you may need to borrow more to cover the outstanding difference in price.
Timeline: It’s important to have a realistic timeline in place when buying before selling. How long do you expect the sale of your current home to take? Are you confident it will sell quickly, or do you anticipate challenges in finding a buyer? A clear timeline can help you avoid being stuck with two homes at once or having to rush the sale of your existing property.
Bridging Loans/Financing: If you buy before you sell, you’ll likely need a bridging loan to cover the cost of owning two properties at once. A bridging loan allows you to finance the purchase of a new home while your old one is still on the market. However, these loans come with higher interest rates and can be a financial burden, especially if it takes longer than expected to sell your current home.
Potential Benefits
Avoid Renting: Buying first means you can move straight into your new home without the need for temporary accommodation. You won’t have to deal with the hassle of short-term rentals, applications, moving your belongings twice, or disrupting your lifestyle during the transition.
Buying Lower: In a rising market, buying first can work to your advantage, as you can lock in a lower price for your new home before values increase. This could save you money in the long run and make the purchase more affordable. It’s a smart strategy if you’re confident that property prices will continue to rise.
Downsizing: If you’re downsizing, buying first allows you to get a better sense of the space you’ll need in your new home. You can sell or donate possessions that won’t fit in your new place, simplifying your move and reducing the need for storage. It also helps ensure that your downsized home meets your needs before committing to selling your current one.
Security: Buying first provides security in knowing that you have a new home lined up. You won’t be left in limbo after selling your current property, unsure of where you’ll live next. It gives you a clear plan and allows you to move forward with confidence, knowing exactly where you’re headed.
Partner with We Do Property Today
Buying and selling can be exciting, but comes with its equal share of challenges. Luckily, we have knowledgeable, friendly, and experienced real estate agents across the Sunshine Coast. By partnering with We Do Property, you’re getting access to:
- Established trusted networks, local industry knowledge, and property experience
- A streamlined approach to every step of your property journey
- Transparent fee structure
- Extensive knowledge of local laws and real estate compliance
- Effective communication with regular updates on your property
