The sell/buy dilemma (and how to conquer it)
Let’s face it. Buying and selling a house is stressful at the best of times. But now, in a heated property market, stress levels jump through the roof! Why? It’s the sell/buy dilemma...
The dilemma is, in the current market, most houses are selling at auction. So Subject to Sale offers don't work. To buy a house you need to pay cash. This means if you own your own home, you need to sell it first (in most cases). And therein lies the problem.
What if you sell your house but then you can't find a house to buy? You're left with no accommodation. Property values continue to increase. And you're still no closer to your dream home. Argh!
But with the right approach, it doesn't need to be so stressful.
How to juggle selling before buying in a heated market
The main thing is you don't want to push yourself into a corner. You don't want to risk having to buy a house that's not quite right or sell your house for less than its worth.
So how do you avoid the corner?
The first thing you need to do is to get a feel for the market and work out your budget. What are houses like yours selling for? What are houses like you want to buy selling for?
Once you know what your budget is for selling and buying, there are a few options for selling your house.
a) Sell with a delayed settlement to allow time to find a suitable house
Even if you sell your house at auction you can control the settlement date. Delay the settlement to give yourself time to find a house. Give yourself as long as you think you'll need. And, if you find a house earlier than expected, you can always approach the buyer - they may be amenable to moving the settlement forward.
b) Sell your house and move into temporary accommodation
The next option is to sell your house (for a great price) and move somewhere else until you find the right house to buy. This could mean moving in with family or into rental accommodation. Remember, the rental market is tight so you'll want to get this sorted before you sell. The key here is to remain active with your househunting. In this market buying a house today will probably cost you less than buying it next week - so you need to keep at it. There's probably a limit to how long you can stay with your in-laws!
c) Buy first and use bridging finance
What if you find your dream home before you've sold your existing home? You don't want to miss out on it. Depending on your financial position you could go for bridging finance. Bridging finance is an interest-only loan for a short term to help 'bridge' the gap when you have mortgages over two homes. Beware, paying mortgages for two homes at the same time may not be easy. You'll need to talk to your bank in advance. Thankfully in this market houses are still selling quickly so you shouldn't be tied up for too long.
If you're serious about buying a house at the moment then you simply need to get stuck in and do it. Yes, it may be difficult. Yes, it may be stressful. But think of it as short term pain for long term gain.
Do your research. Know what you're looking for and what you could potentially get for your place.
Talk to an experienced real estate agent, talk to your lawyer and decide on your approach. Then attack.
There is no sell/buy dilemma if you just do it!
Rodney Fong is a Licensed Salesperson and Auctioneer working with clients throughout Tauranga, Mt Maunganui and Papamoa.< Back to Blog Articles