Selling Before You Buy

 In the UK most home movers do this:

  1. They start house hunting
  2. They fall in love with a property
  3. They put in an offer (it's accepted)
  4. They then have to rush to sell their current home in order to raise the funds needed to make their purchase

Placing such pressure on making your sale is a risky strategy and in many cases it leads to homeowners selling for less than they deserved.

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Sell a House Before You Buy a House - Reason 1

By selling before you buy you put yourself in a strong negotiating position when dealing with prospective buyers.

This is true because:

  1. Whenever you sell anything, the strongest position to be in, is when you're least need to make the sale.
  2. If you've not fallen in love with a new property - had your offer accepted - need to sell quickly to raise the funds needed to complete on the purchase - then you can't be pressurised in to selling before the right offer comes along.
  3. You remain in control of the pace of your sale. You're free to decide when and who you will sell to.
  4. It won't matter if your home doesn't sell as quickly as you thought.You're free to hold out for best price.

Sell a House Before You Buy a House - Reason 2

By selling before you buy you put yourself in a strong position when making offers to vendors. You'll be a preferred buyer.

This is true because:

  1. You'll be a chain-free buyer and so the buyer that ready and able to proceed immediately.
  2. A seller will gladly take his property off the market if he receives a decent offer from you. If he's trustworthy that means you'll no longer have to worry about being gazumped. (There is nothing worse than finding that dream home and then having another buyer out-bid you at the last minute).
  3. You'll be able to offer less money on the property than a buyer that still has a property to sell.

Beware! Selling Before Buying is Not Risk-Free

Here are the 2 main risks associated with selling first:

  1. If prices are rising fast, selling and then taking a long time (3-4 months) to find a new home can spell disappointment. This is because prices may have risen to such an extent that you are priced out of the market. You need to get a grip on what prices are doing in your area. Ask Estate Agents for their opinion and get research from websites such as HomeTrack and HousePriceCrash.
  2. If you sell and can't time your purchase to perfectly overlap your sale, you may have to rent for a period.

Most seasoned sellers don't mind mind renting. They've been part of a chain before and know that renting (although mildly irritating) is in reality a far less stressful proposition.

Modern removal companies make these double moves. They take your belongings and safely put them into discount storage while your renting. When you've found your new house the removals company will collect your belongings and bring them to your new home.

What to Do if You Really Don't Want to Rent

If you're not prepared to rent for any length of time you will have to make it clear to buyers that you will only accept their offer on the condition that you find a suitable property to buy.

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

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

It's perfectly possible that you may not find a suitable home to buy within the negotiated time period. Or you feel that values have moved on since you first agreed a price ∧ now your agreed sale price is looking a little light.

In both these situation you and your buyer need to sit down and renegotiate.

If your buyer won't renegotiate you will have to put your property back on the market and start again. This will sting a bit but it won't sting nearly as much as underselling for £10Ks.

Some Help Timing Your Sale & Purchase

Tip No.1 - Do Your Research!

Before putting your property up for sale make sure you know:

  • Where you want to move?
  • What type & spec of property you're in the market for?
  • If that kind of property often comes up for sale?
  • That you're pre-approved for a mortgage?
  • That the properties you'll be interested are affordable?

Next thing to do is put your property on the market and wait for a decent offer.

Once you've snared a buyer (or have started to attract a steady stream of positive viewing) start your house hunting efforts in earnest.

Really put yourself out there, hassle estate agents constantly and make yourself available to view every (& any) suitable property.

Tip No.2 - Choose a Good Conveyancing Solicitor!

A good conveyancer is:

  • Someone you can talk to.
  • Someone who takes the time to understand your personal situation.

A good solicitor will help you control the pace of a transaction. They can speed things up when needed but more importantly they can slow things down if you need more time to find that new home.

When you're selling property your solicitor, not your Estate Agent (if you bother to use one), will be your greatest asset!

First of all, expect to be gazumped (you are now in the situation where it is most likely to happen).

Second of all, expect to pay over the odds to secure the house you want!

Of course you may get lucky and avoid both these things. But ask yourself this:

Would you take your house off the market for a buyer that still had to sell their house (i.e. a buyer that's not really ready to buy)?

Wouldn't that buyer have to offer you more money than someone who was ready to proceed immediately?

Thirdly, you'll have to take out a Bridging Loan facility in order to finance your purchase and this will be:

  1. Expensive.
  2. Financially potentially pretty risky.

Typically your repayments will be between 0.75%-1.25% of the loan amount (per month) + fees. That can add-up quickly.

If you can't sell your property and have to pay-off your mortgage and bridging loan for any sustained length of time it can be crippling.


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