Sell first or buy first?

Selling a home before finalising the purchase of a new one can lead to many problems.

In the current residential property market’s high demand conditions, those planning to sell their homes may well find, especially if they are in popular suburban areas of South Africa’s big cities, that once it is known that the home is coming onto the market, potential buyers (and rival estate agents) may be at their door before they have had time to sort out their future moves.

This situation, says Tony Clarke, Managing Director of the Rawson Property Group, can lead to home owners selling before they have managed to buy a new home – and all his experience indicates that this can be highly disruptive to family life.

“Most families,” he says, “intensely dislike moving home and having to do this twice, i.e. by moving first into rented premises for a time, can be particularly irksome to them.  If, of course, they are transferring to another city or to an area well away from their current position, it may be that renting for six months to a year is the course to take so as to give them time to get know their new area and to find a suitable home, but in general it is more satisfactory to move directly from one home to another if this is at all possible.”

Those who try to achieve this, says Clarke, usually start making offers on new homes well before they have actually sold their own – and they can, to an extent, protect themselves in this situation by making their Offer to Purchase conditional on their selling their existing home.

So far, so good – but there can be a catch here too:  a shrewd buyer when advised by a good estate agent will almost certainly in the document accepting such a deal insert what is known as an ‘acceleration clause’.  This will entitle the seller if he receives another offer which he likes and which he considers satisfactory to insist that within a stipulated time period – sometimes as little as 48 or 72 hours, sometimes a week or more – the Offer to Purchase is made unconditional, i.e. is no longer subject to the sale of the buyer’s existing home.

“Obviously if the new offer is a good one - is in cash, at a satisfactory price, or is backed by an already guaranteed bond – the seller is not going to wait around for the first buyer to sell his home.  However, in many cases the new offer may not be as good as the original one and when this happens a knowledgeable estate agent can often persuade the seller to extend the acceleration clause long enough to enable him to sell his existing home and get the necessary money into his bank account.”

“All in all, however, it is wise as far as possible to avoid selling one’s existing home until the deal on the alternative home is assured,” says Clarke.

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 17 Nov 2017
      FWJK has announced the launch of its latest residential brand, the Lil’ Apple, which will be launched simultaneously in two developments in Cape Town and Umhlanga totaling 600 apartments. The Lil’ Apple is set to be a brand of FWJK’s New York style apartments which will be rolled out nationally.
    • 17 Nov 2017
      It’s been a tumultuous year on many fronts, with socio-political uncertainty setting the tone for much of South Africa’s economic activity yet despite this and seemingly counter-intuitively, the residential property market has held up well.
    • 17 Nov 2017
      The EAAB (the Estate Agency Affairs Board) recently claimed that around 50,000 illegal estate agents could currently be operating illegally.
    • 16 Nov 2017
      Penthouses are synonymous with New York – characterised by high-rise living that is decidedly luxurious and spacious. While exclusivity comes at a price, you can still create a “penthouse” look and feel in your existing apartment or even the upstairs bedroom of a double storey house with some clever design changes and styling touches.
    • 16 Nov 2017
      The area has long been popular with kite surfers and, with escalating property prices in Cape Town itself, is increasingly in demand with home owners who work in town, but are looking to invest in more affordable properties.
    • 16 Nov 2017
      Cape Town’s popularity as a world-class tourist destination has resulted in a spike in the number of homes available for holiday lets and fuelled investor demand for sectional title units with short term rental potential.
    • 15 Nov 2017
      Sappi, one of South Africa’s oldest global companies and a leading global supplier of sustainable woodfibre products, has moved its global and regional headquarters to a new site on the corner of Oxford and 14th Avenue in Rosebank.
    • 15 Nov 2017
      There’s an old saying in real estate that you should seek to make a profit when you buy, not only when you sell – and a large part of succeeding at that endeavour is buying a home in an area with desirable features that will enhance the resale value of your property.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us