Should You Sell Your House First Before Making an Offer
In the current climate there may be some good reasons to consider selling your house first before you have even started looking for your new home. Prices may have already peaked and it may be a good time to sell. However, you will need to consider where your going to live once your property is sold and whilst your looking for your new home. If you choose to to sell your house first you will probably have to move into rental accommodation before you make your next purchase. There many other factors to consider which will be discussed below:
If House Prices Fall you May be Able to Sell Higher and Buy Lower
Brexit uncertainty and the threat of the next recession has many people speculating that house prices are set to fall. Indeed, Mark Carney rang alarm bells towards the end of last year with a prediction of up to a 35% house price fall and indeed in the last recession prices fell around 20%. There could be a good opportunity to sell high, rent for a few years and buy at the bottom of the market. Also, house prices have shown some declines already this year.
This strategy doesn’t come without it’s own risks. There is the chance that house prices could rise and you could out price yourself, therefore missing out on rising house prices and ending up with a smaller home than you could have bought straight away. Also, there is a risk that mortgage products that were once available may not be available when you are ready to buy your new home, or even your personal circumstances may change i.e a job loss.
Take for example the last recession, house prices fell on average 20%, many mortgage products were pulled form the market place during and stricter lending criteria including higher deposit requirements prevented those who were wanting to buy at the bottom from actually buying. The same could happen again and the risk of not knowing will increase the longer you stay off the property ladder. Therefore, if you do wish to sell first and then buy it may be wise to do so with a shorter plan in mind, unless you have enough equity in your existing property so that you can become a cash buyer once you sell, avoiding any risk of not being approved for a new mortgage.
Avoid Having to Sell Quickly at a Reduced Price
It will probably be very difficult to keep your eye off the current homes available to buy in your desired area. However, if you don’t already have a desired house in mind then it will take the emotional desire to sell your home even faster out of the question. At Direct House Buyer we receive many enquires from people who just wish to sell their house fast because they have found their dream home. The unnecessary pressure of needing to sell quickly just because you have your eye on another property can be avoided if you avoid shopping around before you actually sell.
Avoid Being Stuck in a Chain
By selling first you completely avoid being stuck in a frustrating chain. We regularly receive enquiries from people who have been unable to purchase their new home because the buyer for their house has pulled out from the purchase. The wait and anxiety of relying on others can be avoided if you sell your house first and aren’t involved in a chain in the first place. In a more buoyant market chains collapsing aren’t such a problem but in the current subdued market if you loose you buyer it may take a very long time to find another one. More info on selling your house first so that you can avoid being stuck in a chain can be found here.
Better Negotiating Position as a House Buyer
Sellers don’t take offers too seriously when they know that the person making the offer still needs to sell their house first. Particularly in the current climate where the speed of property sales aren’t happening that quickly. As a house buyer you’ll be in a far better position of negotiating a discounted price if the seller knows:
- That your offer can complete quickly
- Your offer is reliable and not dependant on your own house selling
- There is no possibility of a chain collapsing
- Your offer is real not just a what if I sell my house role play
- If someone else makes an offer, even if it’s higher than yours and they haven’t already sold their home then the seller would still more likely consider your offer.
You’ll Know How Much Money you Have for your Next Purchase
Sellers may have an unrealistic expectation of how much their property can achieve on the open market and you don’t know exactly how much money you have available for your next property purchase until you have actually sold your home. Rather than falling in love with a home that you wish to buy and being overstretched if there is a short fall in your own property sale it is certainly convenient to know exactly how much money you have before you start looking for your new home and making offers.
Avoid the Uncertainty of a Possible Housing Market Crash
With the possibility of a bad Brexit fall out and the inevitability of another recession at some point, if your concerned about the possibility of prices falling and losing some of the equity from your home then if in doubt get out! By selling your home and moving to a rental property you will eliminate your exposure to a possible falling market.
Rent Whilst Looking for your New Home
Unless your planning on living with family or friends, or even staying at a hotel which could be pricey. The chances are you will have to move into a rented property whilst your looking for the new home that you wish to buy. Technically you’l be moving twice, first into your rented home and then into your actual home and the cost of moving twice should also be factored into whether or not this route is the best for you.
Short Term Rentals can be Better Deals
The fact of the matter is that you don’t know how long it will take for your desired property to come onto the market, it may already be sitting there. However, even if you are in a ready position to buy it can still take a number of months until the transaction completes. Quite often short term lets i.e just for 6 months can be better value for money than your typical 1 year rental property and it may be worth while looking out for any of those deals. Alternatively, if you do find a 1 year rental property ask the letting agent or landlord for a 6 month break clause which means that you are actually only tied into the property for 6 months. It may be helpful to be completely upfront with your circumstances and approach a letting agents saying that you wish to rent on a month by month basis, this could even provide a lifeline for some landlords who may be struggling to rent out their property and will be grateful for the short term rental at the least.
Is Selling your House First Before you Buy a Good Idea
It seems that in the current climate it’s probably a good idea to sell your house before you start making offers to buy another one. The market is very disjointed at the moment and the chances of a chain collapsing is higher than more recent years. If you are going to rely on the person looking to buy your house to sell their house first, then it may be frustrating to watch your desired home come off the market before you have the chance to complete on your own home sale. In conclusion if you wish to do one thing at a time and get the sale of your own property out the way first it will put you in a better position as a buyer for when you do find your next desired home.