Are you really in trouble if you buy property before you sell? Here’s what the experts say

There is always a lot to consider when buying and selling your property, but one of the first steps in the process is figuring out whether you are better off selling or buying a place first. 

Both options are as plausible as the other, but people with certain goals and those who are driven by different factors may find one is better than the other.

A good place to start when considering what is right for you is understanding what is going on in the market.  

In a market where house prices are rising, buying a property before you sell one may mean you get better value for money, and your property may sell for more than you paid as its value continues to increase. 

Buying before selling can also provide assurance as you have a place to go once your current home sells, says Tonya Davidson of Davidson Property Advocates. 

“There are certain demographics that value certainty – and that could be people with very young children and the older generations,” she says. 

“Sometimes they’re not driven by money per se, but by certainty and security, and also making sure they’re finding the right property for them without being forced.”

But for those who choose to sell first, comfort may be found in the fact your home has already sold, and you will have a clear picture of the funds available to you for a future purchase. 

When considering the disadvantages, more red flags appear when sellers choose to buy a new home first, Davidson adds.

In the time between buying a new place and selling a current one, you could be faced with paying the cost of a bridging loan.

This means that, instead of paying two mortgages, a buyer will continue to pay the mortgage of their current home with the new loan added to the balance. 

When your home is sold, you’ll need to pay off the bridging loan and the interest it accumulated, plus other potential charges. 

“Banks aren’t as lenient as they used to be, and a lot of people don’t realise that, so that is definitely something that sellers need to explore, especially at the moment with interest rates,” Davidson says. 

“The flip side to that, however, is that if you sell first you could be faced with renting and a double move. But I believe the less stressful of both options is renting.

“Renting may not be an ideal scenario, but there is nothing quite like financial stress to kill your mojo. And renting may not even happen if you buy within the time frame.” 

For those who choose to sell their home first, there is also less pressure to rush a sale, so you can wait until your ideal price is reached in whatever market you find yourself in at the time. 

On the other hand, it can potentially mean sellers will have to buy a new place fast, which could result in a purchase of a property that isn’t their ideal home, says Darren Piper of Universal Buyers’ Agents. 

“Some people who sell first are then rushed into buying something or renting for months at a time, which can be seen as a waste of money,” he says. 

For those who are financially comfortable enough to do so, Piper says he recommends buying a property as the first step in the process. 

“I would recommend [buying before selling] as you know what your next place is going to look like and you know it exists, and you don’t have to worry about a shorter time frame to transact both,” he says. 

“It is important to manage the timing of both correctly, but also not overextend yourself financially.”

When buying and selling your home, understanding where your finances stand can determine which order is best for you. 

It is important to speak to a lender to get a clear idea of this, as well as your borrowing abilities. 

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