Should I buy a new home before I sell my existing home?

Homeowners who are looking to move face a common and niggling dilemma: should you buy another home before you sell your current one? Or should you sell your current home first? Elaine Chetty, Licensee of Seeff Richards Bay, gives us the lowdown on the best route to take. Some homeowners enjoy holding onto their ability to live in their current home until they find a better alternative. Others don't want to make a financial commitment to a new home until their current home is sold, or - at the very least - under contract. Factors like whether a homeowner is moving locally vs to another province or country, whether or not the homeowner has children in a particular school, and the homeowner's deposit also play a crucial role in this decision. Let's take a more in-depth look at the advantages to both options, so that you can make the choice that is right for you. Advantages to selling your home first include the following. Deposit: The most obvious advantage to selling your current home first is that you'll cash out the equity in your current house. You can then use this money as the deposit on your next home. This is one of the most common reasons for selling first. No contingency (subject to offer): Many agents will write offers with a 'subject to home sale' clause, meaning the offer is contingent upon the buyer selling their current home within an allotted timeframe (in order to free up the deposit). If you can avoid writing this contingency by selling first, you'll make a stronger offer - which could be a trump card in a competitive market. In other words, selling first might help you to land your dream home before someone else has a chance to snatch it. Predictable bond payments: By selling first you remove the possibility of needing to make two bond payments simultaneously. In fact, if you're able to live with friends or family during the short-term gap between selling and buying, you may be able to pocket a few months' worth of bond payments too. This can help you to build up cash reserves to cover various moving and other expenses. Greater focus: If the idea of selling and buying simultaneously overwhelms you, you may find peace of mind in focusing on one step at a time. By selling first, you can concentrate on improving and staging your property to make it show-ready, and stay in your home while you patiently wait for the best offer. On the other side of the coin, advantages to buying a new home before selling your old home are as follows. You only move once: If you sell your home first, you'll need to move twice - first to temporary accommodation and later into your new home. This doubles the hassle, and results in the process (from start to finish) dragging out longer. In contrast, buying first ensures that you'll only need to move your belongings once, and you won't need to bother finding a storage unit or a month-to-month rental. Shopping time: If you buy first, you give yourself ample time to shop around for a home you truly love. You won't feel pressured to close on another home quickly just because your short-term lease is about to expire, you're tired of staying on your sister's couch, or the school year is about to start. If you're in a competitive housing market in which you might need to make offers on multiple properties, enjoying the luxury of time can be particularly valuable. As can be seen, both options hold distinct advantages and disadvantages. The bottom line is that there is no 'best' answer to this question - each option includes trade-offs. Your personal circumstances and preferences will be the deciding factors. Contact Elaine Chetty, Seeff Richards Bay, on 083 513 5559; (O) 035 789 0490/1, email elainec@seeff.com
03 Nov 2015
Author Seeff