Tips on buying & selling at the same time

For the ultimate sugar and stress high, buying a new property while selling your existing one can be one of the best. Especially if a high percentage of your existing and new properties are mortgaged to the bank.

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Many of us don’t have any choice of course, as the equity from your existing house is needed to put into your new place.

What you do have a choice in is whether you buy or sell first, or whether you throw it all in together, push blend on selling/buying simultaneously, and cross your fingers it will all turn into the perfect property smoothie.

Conditional purchase

Choosing to buy first and make your purchase conditional on the sale of your existing property is a fairly standard clause in property sales agreements. It buys you some time to market your home for sale (if you’re successful getting a conditional purchase).

You’ll need to make sure your offer is appealing to the vendors of the property you want to buy, as you’re basically asking them to trust you to sell your property before going unconditional on the purchase of theirs.

If they’re considering your offer against an offer with no/minimal conditions, there’s a high chance they’ll accept the other offer over yours, as your offer has a higher risk of falling through.

Before making a conditional offer on a property, talk to your bank or finance company about the possibility of arranging bridging finance as a back-up option if your house doesn’t sell by the deadline. Bridging finance is an additional short-term home loan that can help you to purchase your new home while your existing one is still being sold. This has some risk, though – if your existing home sells for less than you needed, you could end up with more debt than you’d budgeted.

Selling first

The sensible gremlin in all of us says selling first, then starting to look for your new house with cash in hand is the way to go.

An added plus is vendors love unconditional cash offers, and it’s a great confidence-booster to put a cash offer on the table for your dream home. Selling your existing home first can enable you to do this.

If you’re planning to sell your existing home anyway, the best way to make a cash offer on your next one of these is to sell your property first and, if required, get finance pre-approval from your bank or finance company, so you can look for your next home and negotiate confidently.

Don’t muck around, though… if you haven’t settled on a new property by the time your own home sale settles, you’ll need to rent temporary accommodation. One way to get around this is to set a lengthy settlement date on your existing property (or earlier by negotiation) to give yourself a decent length of time to find your next home.

All together now

If you choose to put your existing place on the market and actively look to buy your next property at the same time, you can look to get bridging finance from you bank to fill in any weeks where you’re short on funds for your new mortgage.

The same adage applies in all cases – ‘buyer beware’. Always have one hand on the calculator and the other on the contracts – this is one battle where you want your head to win over your heart.

This information is not intended as a complete guide, as it doesn’t consider your individual needs or financial situation. Trade Me accepts no responsibility or liability for any inaccuracies or omissions in the content. Always obtain independent legal advice before buying or selling property.