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 great advantages
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 gazumped. 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 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
- If you sell first, expecting to be able to buy quickly after, you may be disappointed and instead have to rent for a time, which can prove very 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.
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. 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 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 exchanging, and between exchanging and completion. This might give you enough time to buy a new place in the meanwhile.