Moving home? Why selling before buying could leave you better off
Here, we break down the misconceptions and uncover the truth about putting your house up for sale first.
“There’s a chance I could be left homeless if I sell first!”
Buying and selling houses is a process. Only you can decide if you are going to make yourself homeless as part of that process.
Way before you pack up and hand over the keys to your house, an offer on the house has to be made, and accepted.
Accepting the offer isn’t a legal obligation to follow through with the sale – you only become legally bound to sell the property to the buyer once you have exchanged contracts.
The process of exchanging contracts takes place over a number of weeks after a sale has been agreed, and before you get to the point of no return; and your solicitor will ONLY act on your instructions, with your authorisation.
That means you’re always in the driving seat. If it comes down to the wire and you’re still not in a position to sell, then you have every right to pull out.
Of course the agent and solicitor will want you to go through with it, but if you keep everyone informed from the start, no one will be upset or force you to hand over your keys. Becoming homeless is simply not an option if you don’t want it to be!
“Once it goes on the market, my house will sell within a few days. So I should wait to find somewhere to buy first.”
If you want to move house, then you need to put your house on the market to sell first. We don’t say this just because we want your business; it’s because we know our business, and we know that it is the best step you can take to reach your end goal.
But the notion that it’s best to hold back to sell only once you’ve found your perfect pad is a complete misconception and could even cause a perfectly good sale to fall apart.
Although there are cases where houses are snapped up within days of going on the market, you have to think about this from all angles. Every hour that a house is on sale, is an opportunity for that house to be bought… including that dream house you’ve been holding out for.
A homeowner that has put their house on the market several weeks before finding their dream home is more likely to be in a stronger position in the chain to buy quickly – every seller’s dream.
A seller will simply not accept an offer from a buyer who hasn’t even got their own house on the market yet, even if they come in (overcompensating) with a higher offer of a few thousand pounds.
Why put yourself in a weak position where you could pay over the odds, or lose out completely, when all it takes is to get your house on the market earlier than you anticipated?
“I don’t want to let my buyer down – what if I can’t find another property that I like?”
Unfortunately, the housing market is a fluid, constantly moving phenomenon, where sales fall through, circumstances change, and sometimes buyers are let down. It happens. Everybody who buys or sells a house knows what they are getting themselves into.
But consider this: not finding a property that you don’t like isn’t a dead-end, unlike the scenario above. Not putting your house on the market because you expect it to sell within a few days is perpetuating a weak position that will never see you have an offer to buy accepted.
There is little chance you will be able to move on. But not being able to find a property that you like enough to make an offer on is a completely different kettle of fish, because once you have a buyer, you are in the chain and you have a fighting chance of getting your offer accepted once you do come across that dream house.
When selling a house, transparency is important. Let everyone know your situation, and when an informed buyer comes along, they will be more likely to stick it out until you’ve found your perfect house. Your buyer will typically be content to wait around for two to three months, or perhaps even longer if they are up-to-date with what’s going on from your end of the chain.
More reasons to sell first…
If you’re still not quite convinced about the merits of selling first, here are a few more reasons… especially if you’re looking to take the next step up on the property ladder, and upsize:
Across the board, the housing market rises and falls, but at the moment there is a definite upward trend in the price index.
The simple maths speaks for itself; the longer you leave selling, the more expensive buying generally becomes. It’s April 2014 and you’re keen to sell at £200,000. You’re in a position to increase your mortgage by £100,000 because you’re looking to upsize to a property currently worth £300,000.
But you don’t put your house on the market for another six months, because you’re worried that you’ll be left homeless, or you think that your house will sell within a few days, or perhaps you’re concerned that you’ll be left in a position where you’ll be letting your buyer down if you can’t find your dream home as quickly as you’d hoped.
Meanwhile, your house’s value has increase by another £10,000. Great news for you… until you find out that the house you considered back in April has now gone up by £15,000. You decide to go for it, only now you have to increase your mortgage, leaving you £5,000 worse off than you would have been back in April.
Putting your house on the market earlier will not only put you in a stronger position to buy and move the process on more quickly and efficiently, but it’s a decision that could ultimately end up saving you thousands of pounds.
Adam Day is founder of online estate agency Hatched.co.uk