How to maintain your sanity while buying and selling simultaneously
Whether you’re looking to downsize because you’re finally empty nesters or your family is expanding, you may find yourself in the position where you want to buy and sell your home at the same time.
If you want the purchase and sale to settle on the same day, it’s known as a simultaneous settlement. But it’s not always easy!
What are the benefits?
While selling your old home and buying a new one simultaneously carries some risks, there are many benefits:
- When it works, you don’t have to pay rent on a property while waiting to buy.
- You don’t have to pay a mortgage on two properties concurrently.
- You can move out of your old house and straight into your new house. That means reducing extra stress and avoiding the time-consuming and unnecessary packing and storage of your belongings.
What are some risks?
- If one of the settlements is delayed, it can negatively impact the other.
- You might end up paying for two mortgages if you fail to sell your home before you settle on your new one. Also, if you don’t research the market well and your home sells for less than expected, you may make a substantial loss.
- If you don’t find a home to buy within a pre-arranged six-month settlement period, you could be forced to rent if no negotiation is reached.
How can I set myself up for the best possible outcome?
Engage a team of specialists
First and foremost, it’s essential for you to have all the experts working for you to achieve your goals. You will need an experienced and professional:
- real estate agent
- conveyancer or solicitor who specialises in simultaneous settlements
- mortgage broker
Choose whether you want to start the sale or purchase first
Use your agent’s knowledge to assess the market. Generally speaking, they will advise that in a rising market you should buy first.
This is so you buy at a cheaper price and sell at a higher one. It also reduces the risk of not selling your property if it’s a strongly performing market.
Some agents recommend floating your property off-market first to get a feel for how it might sell at a later date.
In a falling market, an agent may advise the opposite. For example, sell first and buy second as it reduces the risk of paying two mortgages simultaneously. You won’t have to accept a bad offer on your home due to necessity; you know how to purchase your new home.
Assess your best settlement options
Utilising your Solicitor or Conveyancers advice consider the following:
- Selling your home with a long settlement of up to six months. Include a clause that allows you to bring forward settlement as long as you give four weeks’ notice. You can then look for a property to buy and when a property is found, you can move the settlement on your old home forward so that both properties settle on the same day.
- Be willing to sell your home a little below value or buy a little above value. This will provide the other person with an incentive to agree to the delayed settlement.
If you can’t find a new house before you have to settle your old one, ask your buyer if a leaseback option is a possibility.
