select
|

Buy or sell, what’s the right order?

With the competitive environment surrounding today’s real estate market, some homeowners who have decided to move to another property may find themselves asking whether it is best to first sell their existing property, or find another home before they sell their current one.

Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, says that with high demand and low inventory buyers need to move quickly when they find a property that they really want. For some this may mean putting in an offer while they still currently own another property. “The answer to whether homeowners should look to buy first and sell their current property later, or sell before looking at other homes will largely depend on their personal circumstances and unique situation,” says Goslett. “There are a few aspects that first need to be considered and will influence the homeowner’s decision. These factors include the financial options available to them, local market conditions and of course the homeowner’s feelings about moving more than once should they have to vacate their current home before the new home is available.”

Goslett provides three considerations that homeowners need to bear in mind before making their decision:

Consider - finance

Only a small percentage of buyers are able to purchase a property with cash, while most are reliant on banks to obtain the necessary finance. What this means is that homebuyers who are upgrading to a larger or more expensive home may need the equity from the sale of their current home as a deposit. 

“In the instance where the sale of the owner’s current home needs to happen first, they could sell the property and then negotiate with the new owners that they rent the property back from them until they find a new place. This will depend on how eager the new owner is to move into their new home and the previous owner will be required to pay occupational rent,” says Goslett. “Another option would be for the seller to find temporary accommodation with family members or friends or at a short-term rental. In this instance storage facilities may also become a necessity.”

According to Goslett, sellers who would like an advance on their home equity can opt to have the money bridged before the sale of the home is concluded.  The bridging finance will be based on the equity available on the property, the seller’s credit record and the expected cash inflow.

He notes that while having the equity readily available is a pro, the con is that a temporary living arrangement could force the buyer into making a faster decision than they perhaps should. It is important that the buyer takes the time to find the right home that fits their criteria. With stock shortages a reality in today’s market, it could take more time than initially anticipated. “Perhaps the optimum decision would be for the homeowner to stay in their current home while looking for another property.  They could then make an offer to purchase their next home subject to the sale of their current home going through. This way they have time to do their research and find the perfect home that fits all their criteria before making a move,” advises Goslett.

If the homeowner is in the rare position of not needing the equity from their current home, to obtain finance for an additional property, they still run the risk of being stuck with two properties. While this could be fine as a short-term solution, it may not work for the homeowner on a long-term basis. In this instance the homeowner will need to have a contingency plan in place.

Consider - local market conditions

While there are external factors that impact the property market in general, most areas will be uniquely affected by their individual circumstances. Aspects such as the type of home, price range and availability of other similar homes in the area will all have an impact of the sale of the property. “A real estate professional will be a valuable source of information when it comes to researching the specific factors that influence the property market in a particular area. The agent will be able to provide the homeowner with insight into how long homes are sitting on the market for on average, and how much they are selling for. This information will be vital when gauging time frames and possible equity expected from the sale,” says Goslett.

On the opposite end, from a buying perspective, the purchaser should be researching properties that are available in the areas they want to buy in, looking at all aspects of the neighbourhood and elements that may have an influence on their decision. 

Consider - risk and emotion


Regardless of whether the homeowner decides to sell first, or buy and then sell, each option brings with it an element of risk. For this reason, homeowners must ask themselves whether it would be better to sell first and possibly not have accommodation to go to or buy first and have two bonds to pay until the one home is sold. “Although there will be an emotional element that drives the answers to each of these questions, ultimately the answers should be based on the financial options available, along with the local market conditions. Either way, the homeowner will need to be prepared and have a plan in place to deal with the consequences of each scenario,” Goslett concludes.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 16 Jan 2018
      The start of the new year is symbolic of new beginnings. A good time to take stock of one’s possessions as well as how necessary they actually are. However, seeing as the process may appear daunting – a plan goes a long way.
    • 16 Jan 2018
      The Western Cape is still in the throes of a severe drought and many households have to adjust the way they use and save water. It is a little more complicated in sectional title schemes, however, as it is not that easy to implement grey water systems for multiple users and it is also difficult to monitor water usage accurately if there are no separate water meters
    • 15 Jan 2018
      In ideal rental situations, when a lease is signed the tenant will stay for the full duration of his lease without any complications and the landlord will uphold his obligations, creating a win-win situation for tenant and landlord.
    • 15 Jan 2018
      The Atlantic Seaboard’s housing market has stoically withstood the brunt of the growing economic and political instability, consistently achieving double digit growth way above the national average, however, in 2017 South Africa’s most resilient market finally began to yield to the pressure.
    • 15 Jan 2018
      Sectional title insurance can be a little confusing and, as a new owner, you may be tempted to just assume your body corporate has you covered. While this may be the case, understanding the extent of your coverage and your personal liability is the only guaranteed way to protect yourself against potentially costly oversights.
    • 12 Jan 2018
      After an exceptionally good 2016 during which the Winelands residential market outperformed the national average by a considerable margin, 2017 was marked by a difficult winter which saw a notable slump in sales and demand.
    • 12 Jan 2018
      Small spaces can make a big impact. Irrespective of size, an aesthetically pleasing outdoor space can be a major selling point for prospective buyers. “Even if the outdoor area is small and only enough to sit and have a cup of coffee, it might just be the feature that makes the stand out from others in the neighbourhood,” says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 12 Jan 2018
      The boom of the digital age has opened up many doors to the way we buy and sell property. In the past we used to pop out and pick up the latest copy of the property magazines available, today we switch on the PC or grab our smart phones as online property portals & Facebook has become the new ‘go-to’ for anything, including shopping for your new home from the comfort of your couch.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK