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MuddyPuddles

WDYT? Sell first or buy first?

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MuddyPuddles

We are planning to sell our 3x1 outer suburb Perth property for a similar property in a middle ring suburb (moving for school zones and public transport). There are quite a few houses for sale in both areas, but probably more in our current area. It would likely take 4-12 weeks for our property to sell.

 

We are trying to decide if we should sell our current house before buying our next, or put in offers for places wet like "subject to sale" and commit to buying first. I can see advantages and disadvantages to both like:

 

- being in a stronger negotiating position if not subject to sale

- knowing exactly how much funds to buy with we have if selling first

- not being rushed to accept a less offer because we have committed to buy already

- concern about how long it could take to find a house we like after selling

- Concern about the market increasing between selling and purchasing

 

I'd love to hear what others who've had experience either way. What do you think, buy first or sell first?

Edited by MuddyPuddles

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Allegra99

I think it entirely depends on the market. I would listen to the advice of local real estate agents.

We bought then sold and did the following:

- had our old house completely ready to go on the market (all minor Reno’s were done. Decided how we would style the house. Engaged real estate agent. When we had our offer accepted our old house was on the market in a week

- I used the lowest possible price estimate for our old house when taking into account how much we had to spend.

- we were fortunate in that our purchase didn’t have to be “subject to sale”. As it was, we were able to align the sale and purchase on the same day, but if it didn’t match up we would make it work financially. If it wasn’t for this, I would have only bought either “subject to sale” or sold first

- we bought and sold when the market was really high. Both properties were on the market for less than 2 weeks

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Holly298

Start actively looking the weekend yours goes live in the market , ideally you want to have yours on for at least a week or two so you know realistically what it’s worth after the first open houses, hopefully by the time you find a few home you like you will have offers on yours and exchange and settle simultaneously so no risk and you know exactly how much you have to spend

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SummerStar

We bought after ours sold. We asked for a long settlement. Once contracts were signed we put a deposit on the new place and settlement was the same day.

We were looking around while ours was on the market but advised by many along the way not to pay a deposit until we had a buyer.

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SeaPrincess

It depends on the market in both areas. When we bought our current house, the average time on the market in this area was 11 days, and in 18 months of casual looking, it was only the 2nd house that DH and I both liked. We were on our way to the first home open when we got confirmation of the sale of our own house (to the tenants). We had moved back to the city from the country and were also renting. The sale settled before the purchase.

 

There’s nothing wrong with a subject-to-sale offer, except that there is the chance you won’t sell, or that a subsequent unconditional offer will invoke the clause requiring you to either go unconditional within 48 hours or let it go.

 

ETA if you make an offer subject to sale, you shouldn’t then accept an offer subject to sale.

Edited by SeaPrincess

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DaLittleEd

Also in Perth. We put a subject to sale offer on a house we liked, and it was accepted. Unfortunately a week later the seller received a non-subject offer, so they invoked the 48 hour clause and we missed out on the house.

 

After that, we decided to sell first. We managed to get a couple of decent offers on our house after the first home open (woo-hoo). We had a short settlement so decided to move to a rental.

 

It has been a great decision, as it has allowed us to now be a lot less rushed, and be in a better position to buy - we know exactly how much money we have to spend, and will be able to be flexible with settlement dates etc.

 

Also, we are renting in a suburb that I wouldn't have necessarily put at the top of our purchase list, and we are loving it, the public transport, parks and neighbours are great. So now we are looking here for houses to buy.

 

If you want any advice, PM me, we might be in similar areas.

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UniKitty

In Perth too. Also a middle ring 3x1.

Perth realestate is in flux with many outer suburbs well oversaturated with houses for sale (eg Clarkson, Ellenbrook), whilst middle ring houses in good school catchments (eg Padbury, Hamersley) are snapped up.

 

You need to figure out what your local market is doing and then decide if your specific home is likely to take a while to sell, or will go quickly. Is it renovated, neutral devor etc

Edited by UniKitty
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Cimbom

Sell first but negotiate a longer settlement period

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2bundles

Really depends on your financial situation. If you are in a position to have enough equity and cash flow in the event house 1 doesn’t sell, then buy first and negotiate a long settlement (if they won’t take subject to sale).

 

If not, then put yours on the market and try to negotiate a longer settlement.

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born.a.girl

I wouldn't get too tied up in trying to get everything going your way. Buyers and sellers are both in the same market, but there can be huge variables between suburbs which means you might have to be the one compromising.

 

Moving twice is a hassle, but if you agree to the buyer's terms on your property (they might want 30 days) they might be prepared to pay good money, when everyone else is wanting longer terms. Same if you can offer flexible terms, you'll attract buyers who themselves haven't sold.

 

You're then able to be flexible with what you buy - you've got the money, the flexible settlement date and may buy at a good price because others cannot meet their demands.

 

 

I know auctions are different, but it's a good example nevertheless. Selling a relative's empty unit, we had five specific requests for individual settlement terms. One relative who's not used to auctions said 'no they can go to the bank and sort their own finances'. I disagreed, saying that whatever we'd lose with long settlement (opportunity cost, insurance, damage risk etc) would more than be made up for by the fact that they had to be the highest bidder, and whatever amount they paid extra as a result, would more than cover those costs. As it turns out, two of those bidders took it to nearly 40% above the reserve between them. Without them, we might have just sold for the reserve. Again, auctions are different, but the concept's the same.

 

You want to attract every buyer, and you want to be able to agree to whatever terms the seller wants, IF you want to maximise your price, and minimise your purchase price.

 

I've sold and settled on the same day twice and one of them was a freaking nightmare. Never again. Next time I'll do as per Da Little Ed.

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tothebeach

Depends on what’s important to you. For us, we wanted a no hassle move. So we bought before we put our house on the market. That way, we knew that we had bought a house that we loved and wanted and could move in at a time that suited us. We were not interested in renting or compromising in our buying decision because we had sold and needed to buy.

 

We had a short settlement for the house we bought (our choice) so have a 4 month period before our other house settles. We had the finance to cover it so that was no issue to us.

 

There was another buyer for the house we wanted. Same money but they wanted a long settlement. The seller had verbally accepted their offer already but took ours instead.

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Ivy Ivy

 

 

We had a short settlement for the house we bought (our choice) so have a 4 month period before our other house settles. We had the finance to cover it so that was no issue to us.

 

 

Is that what used to be called (may still be called) a bridging loan?

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tothebeach

 

 

Is that what used to be called (may still be called) a bridging loan?

 

No - we didn’t need bridging finance. We got a loan big enough to cover it with an offset. When we get the money from the other house, it will reduce the loan significantly.

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SeaPrincess

Is that what used to be called (may still be called) a bridging loan?

 

We had bridging finance when we moved back to Perth from interstate. We had enough equity that we didn’t pay mortgage insurance, and when the property interstate sold, the proceeds reduced the loan value on the house we’d bought here in Perth. It worked for us at the time, but we had to sell within 6 months, and until we had that contract signed, I found it quite stressful. Not all lenders deal with bridging finance - we went through a broker because our own bank didn’t. We had to go with a bank we wouldn’t have chosen and at the first opportunity we refinanced.

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MadMarchMasterchef

We bought our current house then sold our unit. The first offer we accepted fell through at the last minute due to their finance and the whole process was fairly stressful. You may need bridging finance.

But of course the flip side is that moving twice is stressful too and has costs involved so I guess you need to work out how much the bridging finance would be unless you have another way of doing it.

Our unit wasn't in a high demand area. I don't know if lots of properties for sale in the area will mean it takes longer to sell but the lack of public transport might.

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Hands Up

We bought first because we bought for an amazing price and knew we wouldn’t get that price again. It also meant that if we sold our other place for a bit less it didn’t matter. We negotiated a three month settlement so our bridging loan was only five weeks. It all worked out but it’s not without risk and I found it quite stressful.

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Dianalynch

We have bought 3 times before selling, but we were both high income earners at the time, and could afford the mortgage for both places without bridging finance. We sold for what we were after each time, but i found this part stressful.

 

now we are on less money, we would probably sell first. Less risk.

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SeaPrincess

Slightly OT, but which suburbs do you Perth people consider middle ring? I would have said we are middle ring, but I’m not sure.

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-Emissary-

With my parents place, we sold first then started looking while asking for an additional 6 weeks where we paid rent. That gave me 12 weeks to buy a place so we could move in. We found a place within the first 6 weeks so was able to move.

 

It was pretty stressful as I didn’t know if we could find something I could afford at the time. Having no place to go put pressure on and I felt like I had to rush into buying something so I wouldn’t recommend it. We were lucky to find a place for a very decent price.

 

If I can afford it, I’ll probably buy first and then take my time selling. If I couldn’t afford it, I’ll sell first, put almost everything in storage and rent for a short period while trying to buy a place.

Edited by -Emissary-
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born.a.girl

With my parents place, we sold first then started looking while asking for an additional 6 weeks where we paid rent. That gave me 12 weeks to buy a place so we could move in. We found a place within the first 6 weeks so was able to move.

 

It was pretty stressful as I didn’t know if so I wouldn’t recommend it.

 

If I can afford it, I’ll probably buy first and then take my time selling. If I couldn’t afford it, I’ll sell first, put almost everything in storage and rent for a short period while trying to buy a place.

 

 

Yep, I'm sure moving twice is not great, but it would be nowhere near the stress that those forced from rental to rental without a lot of notice experience.

 

You have to pack everything up anyway. If you know in advance that you're not going to be unpacking everything, that's the way you'd pack, so that you only have the basics unpacked.

 

I don't know how renting vs bridging finance (or taking a larger than necessary loan) works out - the first time for me was at the height of interest rates, and bridging finance could only be afforded by the extremely wealthy. The second time we got lucky.

 

I'm too old for the shenanigans and stress now, I'd rather move some of my stuff twice than have to juggle everything.

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MuddyPuddles

Slightly OT, but which suburbs do you Perth people consider middle ring? I would have said we are middle ring, but I’m not sure.

 

This is probably subjective, but to me inner suburbs is within around 5km from CBD, middle between 5km and 16km, and outer being more than that. We are looking to buy in Wilson (zoned for Como high school), which is about 9km closer to CBD than we are now.

Edited by MuddyPuddles
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SeaPrincess

This is probably subjective, but to me inner suburbs is within around 5km from CBD, middle between 5km and 16km, and outer being more than that. We are looking to buy in Wilson (zoned for Como high school), which is about 9km closer to CBD than we are now.

 

Thanks for that, and based on that, we just scrape in at 15.5 km from the CBD.

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petal71

I'd say it depends on your rental (or other living) options if you are considering selling then buying and can't find a place you like before yours settles.

 

For me, with a dog, a short term rental would have been nearly impossible to find. For others with family willing to put them up, its an easier choice.

 

I got a bridging loan that I only had for a few weeks

(the 2nd mortgage part)

because luckily my place sold quickly- at least interest rates are low now so mine was 5%ish (only a couple of months ago).

 

I got sick of having offers subject to sale knocked back because the market is buoyant here, so there were a lot of cash buyers and FHO's.

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DaLittleEd

This is probably subjective, but to me inner suburbs is within around 5km from CBD, middle between 5km and 16km, and outer being more than that. We are looking to buy in Wilson (zoned for Como high school), which is about 9km closer to CBD than we are now.

 

Sounds about right to me. We moved the other direction to what you are planning - inner to middle.

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lozoodle

I'm in camp buy first, I don't want time out of the market. But it depends where you are and the current market and of course your financial position at the time to cover the overlap period (I personally wouldn't get bridging loans etc)

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