Selling before buying is a safer option
Category News
In theory, buying a new home before selling your old one sounds like a great idea, because you would know exactly where you were moving to, when you could take occupancy and how much your new bond repayment would be.
"In addition," says Berry Everitt, CEO of the Chas Everitt International property group, "homeowners who have outgrown their homes often tell us how much easier it would be to move before the marketing process begins. The property could then be permanently 'staged' for sale, for example, which would reduce the stress of showings, especially on families with small children and pets.
"Buying first would in most cases also eliminate the inconvenient possibility of having to move to an interim rental property because you couldn't find a replacement home by the time you had turn your old home over to the new owners."
So why don't more people do things this way around?
"Quite simply, because there is more financial risk in buying first and selling second," he says. "First there is the possibility of having to make two bond repayments every month until your old home is sold, which most people just cannot afford to do, especially now with interest rates on the rise.
"Secondly, it is quite likely that you would also need to have the cash to pay the transfer duties, legal fees and bond registration costs for the new property before receiving the proceeds from your own sale.
"This might make you feel compelled to significantly lower the price of your existing home just to achieve a faster sale and reduce the pressure on your finances in the short term. And it would most certainly put you in a weaker negotiating position with potential buyers.
"So what we always suggest to sellers who are trying to make this decision is to first establish the current market value of their home as accurately as possible, with the help of a professional agent who is really familiar with current market conditions in your specific area."
You need to know, Everitt says, whether it's a buyers' or sellers' market in your suburb, because the chances of a quick sale are obviously much better in a hot sellers' market than in a soft buyers' market. "Next you need to consider if there are any problems with your home that could make it difficult to sell. Is it located across the street from a noisy school? Is it next to a busy freeway? Does it lack a garage or a second bathroom? Is the floor plan awkward?
"Armed with this information, you will be better able to assess the risk of buying first. If demand is high and it's likely that your home will sell quickly, it may be worth doing that. But if you feel at all uncertain of the outcome, it would most likely be best to follow the more conservative route of selling before buying, even if you do end up having to pay some rent while searching for your next home.
"What is more, once you've sold your home, you'll know how much you can spend on a new one, and be able to make offers and negotiate with more confidence."
Issued by Chas Everitt International
For more information
Call Berry Everitt on
082-441-3601
Or visit www.chaseveritt.co.za
Author: Chas Everitt