If you are looking to buy a new home and sell your
existing home you've most likely wondered whether you should
buy or sell first.
There are several things to consider when making this decision
so you are best prepared for the journey. In part one here
we'll look at things to consider when selling first.
You are in a better position to negotiate your
In a quickly rising market your new home may be
more expensive than you planned for
You will know what your limit is on purchase
price when buying your new home
You may need to consider temporary accommodation
if you have not secured a new home by settlement on your sale
The need for bridging finance is less
Possibility of storage fees or double the
You can plan ahead and extend the settlement
period to allow you to secure your new home
If permitted under your contract you may use the
deposit paid by the purchaser towards the deposit payable on your
A main benefit in selling your existing home first is that you
will know exactly what you can spend on a new home. This will help
you budget your family expenses and make the right move for you and
your family. By selling first, you also put yourself in a better
position to negotiation the best sale price as you are not under
pressure to achieve settlement on a certain date.
In this scenario however, a good option is to have a longer
settlement period of approximately 10-12 weeks (or longer if you
are moving to an area where properties are scarce). This will allow
time for the cooling off period on your sale to come to an end and
for you to secure a new home to move into. This will also reduce
the likelihood of needing temporary accommodation and extra moving
Releasing your deposit
Many people looking to move on in the property market may be
hesitant due to access to funds for a deposit, especially if your
deposit funds are tied up in the equity in your home. By selling
first you can overcome this issue. Ensure when your Contract is
prepared that it allows you to use the deposit being paid by the
purchaser prior to settlement. By having this provision in your
Contract you will be able to access these funds for your
If an extended settlement will not work for your buyers you
could raise the option of a leaseback provision. By doing this you
effectively extend your moving out date until you secure a new
home. This is useful if your existing home is one investors are
likely to be interested in as they will have a guaranteed tenant
from the settlement date. The details of this kind of provision are
usually negotiated at the time of exchange.
Contingency plan – Conditional Sale
A last resort to overcome the cons is to make your sale
dependent on you purchasing your new home. Your conveyancer or
solicitor can insert a clause into the Contract that stipulates
that settlement is not triggered until you have secured your new
home which will allow you to line up settlement allowing you to
only have to move once. Keeping in mind this may reduce the number
of buyers interested in your existing home.
Contingency plan – Renting
If the above options do not suit your needs or your purchaser
you may need to consider a short term rental until you have secured
your new home. If you do consider this option, when looking at
rentals be very clear that it is short term situation and check
what the termination costs are if you move out earlier than the
lease expiry date.
If you're thinking of buying first keep an eye out for part
two where we'll outline further considerations to help you
prepare for the journey.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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If an owner wants to remove a caveat, issuing a lapsing notice is a quick and easy way to shift the problem to the caveator.
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