Should You Buy or Sell Property First?

Deciding whether to buy or sell property first is a common dilemma that we, as buyer’s agents, see many homeowners face. Each option has its advantages and challenges, and the best choice depends on various factors such as market conditions, the uniqueness of your current property, and your financial situation. In this blog, we will delve into the pros and cons of buying first versus selling first to help you make an informed decision.

 

 

Buying First

Pros:

1. No Rush in Finding a New Home:
   • Buying first allows you to take your time to find a property that perfectly suits your needs without the pressure of having to move out by a certain date.
2. Benefit from a Rising Market:
   • In a rising market, buying first can be advantageous as property prices may continue to increase. By purchasing early, you could potentially gain equity quickly as your new property’s value rises.
3. Move at Your Own Pace:
   • Having secured a new home allows for a more relaxed moving process. You can plan and move gradually without the stress of immediate deadlines.

Cons:

1. Financial Pressure:
   • Owning two properties simultaneously can be financially straining. You may need bridging finance, which comes with its own costs and risks.
2. Difficulty in Selling:
   • If your existing property takes longer to sell than anticipated, especially if it is a unique or niche home, you could face prolonged financial burdens, including dual mortgages and maintenance costs.
3. Market Fluctuations:
   • The market might shift unfavourably after you buy, making it harder to sell your current home at a desirable price.

Selling First

Pros:

1. Clear Budget:
   • Selling first provides a clear understanding of your financial standing and the budget available for your next purchase, reducing the risk of overextending financially.
2. Leverage in Buying:
   • With cash in hand from the sale, you become a more attractive buyer, potentially giving you more negotiating power and flexibility in closing deals.
3. No Bridging Finance Needed:
   • Without the need to finance two properties at once, you can avoid the complexities and costs associated with bridging loans.

Cons:

1. Potential Homelessness:
   • There’s a risk you may not find a suitable new property immediately after selling, which might require temporary accommodation or renting, adding to your moving costs.
2. Market Pressures:
   • You might feel pressured to buy quickly to avoid the inconvenience of renting, which could lead to less optimal purchasing decisions.
3. Emotional Stress:
   • The uncertainty of not having a permanent place to stay can be stressful, especially for families with children or pets.

Factors to Consider

1. Current Market Conditions:
   • In a seller’s market, where demand outstrips supply, selling first might be advantageous. Conversely, in a buyer’s market, buying first could be more beneficial. If the market is rising, it might be wise to buy first to capitalise on lower prices before they go up.
2. Uniqueness of Your Current Property:
   • If your home is quite unique or caters to a niche market, it may take longer to sell. In this case, selling first might help avoid financial strain from owning two properties for an extended period.
3. Financial Situation:
   • Assess your financial stability. If you can comfortably afford to own two properties for a period, buying first might be less risky. Otherwise, selling first can provide more financial security.
4. Personal Circumstances:
   • Consider your personal situation, including job stability, family needs, and lifestyle. If moving quickly is critical, your choice might lean towards selling first.
5. Risk Tolerance:
   • Your comfort with financial risk plays a crucial role. Buying first involves the risk of market fluctuations and financial pressure, while selling first carries the risk of temporary accommodation needs.

There is no one-size-fits-all answer to whether you should buy or sell property first. Carefully weigh the pros and cons of each approach in the context of your unique situation. If the market is rising, buying first might offer financial benefits. However, if your current home is unique and might take longer to sell, selling first could mitigate financial risk. Consulting with real estate professionals and financial advisors, and considering the current market conditions, will help you make the best decision for your needs. Ultimately, thorough planning and informed decision-making are key to ensuring a smooth transition in your property journey.