Buy first or sell first?
When you have established yourself on the proverbial property ladder you will at some point come to the decision to move house. A recent survey from the UK property website Rightmove found the following top 5 reasons for moving were:
- Fancy a change of lifestyle
- Need more space
- Growing family
- To move closer to family
As you can see the predominant factor influencing a move is personal circumstances and not financial in the majority of cases. With this in mind I thought I would explore the question that so often arises:
Should you put your house on the market and then go searching for a new place or search to find your dream house and once found put your house on the market?
As ever when it comes to property buying and selling there is never a single, nor simple answer; partly because every purchase or sale is a unique experience with a property that is never the same nor the specific circumstances of the buyers nor sellers. One fact that favours finding your next home before putting your home on the market is the fact that at any one time only around 1 in every 30 homes is actually for sale, so if you were to make the decision that you wanted to move house in the next 6 months you would have to accept the fact that the perfect house for you may not come onto the market in that period. Worst of all, that perfect dream home might come onto the market immediately after you have bought your next house! So starting your house hunting early and watching the market regularly is sound advice if your needs are specific and the property you seek is not on the market that often. This fact is partly why over 150,000 people every day in NZ check out property for sale online.
As ever there is a downside to this approach as can be seen in the property market being experienced particularly in Auckland at this time, is that a property coming on to market, especially one that is sought after, is likely to only be on the market for a couple of weeks and end up being sold by auction. This situation can therefore lead to incredible stress as such a situation would require a fast process to get your own house onto the market so you could be in a position to bid at auction for your dream house. Don’t be overly fearful of this situation though, because there is nothing stopping you negotiating prior to the auction a side agreement with the vendor through the agent to a longer settlement or even a lower deposit to assist and provide you with more time in which to get your own house sold or ease the financial circumstances around the deposit.
Taking the opposite strategy of putting your own house on the market first before you go searching certainly can reduce some of the stress. In doing so you will be able to assess the market demand and price for your property and with a negotiated delayed settlement you could put yourself in a very strong position as a cash-buyer to negotiate a good deal if the market suits that situation. Clearly though this approach has the negative perspective that firstly you will certainly have to restrict your selection of property to just those that are on the market and you will also have to be wary of a looming deadline of that date by which you will have to settle on your own house.
As ever in both of these situations you will be in the hands of the market – that is a buyers’ market or a sellers’ market. In the recent year we have been witnessing a very strong sellers’ market which would have encouraged you to put your property on the market once you had found your next home in the certain knowledge that you could sell your own home quickly. However this very fact of a sellers’ market resulting as it does from limited availability and strong demand, has caused some sellers to actually hold off selling because they fear selling their own house too quickly and not being able to find a suitable house matched with a sense that the market is racing at too fast-a-pace for them. Equally when we at some stage again in the coming year or two experience a buyers’ market to enable you to take advantage of the buyer strength in negotiation, you will have had to sell before you can leverage this situation which is tough in a market with high inventory of available properties on the market and a limited demand from buyers.
So as stated earlier there is no single or simple answer to the question. The best advice is to choose to move when it suits you and your circumstances. Plan early and watch the market to be better informed as to the trends and state of the market, know what property you want to buy and where. Get your own house ready to sell and then jump in! The fact is there is no perfect time to buy or sell as you will likely buy and sell at the same state of the market – rising or falling you will benefit in some way and loose out in some way. Just don’t get stressed into not moving for fear of miss-timing the market.