How to sell and buy in the same market

House for sale

Do you sell first and then buy or the other way around? We have had clients do both successfully. Your decision will depend on a number of factors:

Buy first

  • Buying first is a riskier strategy, but you can mitigate the risk by negotiating a long settlement (say three months) then putting your house on the market.
  • The other option is to buy "subject to" selling your place. This is unlikely to work in a market that has a shortage of listings or on a popular property – vendors will probably not accept a “subject to sale” offer unless it is the only one they have.

Sell first

  • Sell with a long settlement so that you have time to buy.
  • Sell "subject to" finding another house. This is unusual but we have seen this where our client was the buyer. In a market that is short of listings, buyers will be more open to a long settlement if it means buying the right house.

Mortgage portability

  • If you have good interest rates (say a five-year fixed rate  of 6.50%) you can transfer that to the new property provided both properties settle on the same day.
  • If you sell first, you can leave the mortgage in place by using the sales proceeds as security. Banks will only do this for a short period of time (a maximum of one month.)

Bridging finance

  • Open-ended bridging is where you buy first and intend to sell (but haven't sold yet.) Banks are reluctant to do open-ended bridging finance unless you are in a strong enough financial position to support both mortgages.
  • Closed bridging is where you buy, and before settlement your existing house is sold under unconditional contract but is yet to settle. This is generally easy to finance.