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
    • 23 Mar 2018
      Durban’s rightful place on the ‘global map’ has been reaffirmed with the recent launch of the new Durban Monopoly board game. The second city in South Africa to be featured after Cape Town, the Durban edition features well-known landmarks such as Moses Mabhida Stadium, uShaka Marine World and The Pavilion Shopping Centre, among others.
    • 23 Mar 2018
      On Show Days, it's essential that you stand out from the crowd. Highlighting your home's finest features could help turn a browser into a buyer. We take a look at some tips to help you achieve the best possible result.
    • 23 Mar 2018
      After a distinctly lacklustre year during which a flood of new homes entered the market to vie for the diminishing attention of increasingly nervous investors, the housing market in Bedfordview kicked off 2018 with encouraging signs of recovery.
    • 22 Mar 2018
      Sustainability is currently a hot topic in the home and construction sector. In light of the progressing climate change and shrinking resources worldwide, it’s one of the most important issues to consider. Sustainable living is the practice of reducing your demand on natural resources by making sure that you replace what you use to the best of your ability.
    • 22 Mar 2018
      The 1% VAT increase which is set to take effect as of 1 April 2018 has set the country alight with many burning questions, most of which cannot be comprehensively answered by our knowledgeable friend Google.
    • 22 Mar 2018
      The picturesque and oft-misty town of Dullstroom in Mpumalanga belies its name. Judging by the rapidly increasing influx of weekend visitors, many of whom then look to acquire property here, it’s anything but dull, quips Anton Greeff, Pam Golding Properties area principal.
    • 20 Mar 2018
      Located close to the fast growing Fourways precinct, Dainfern continues to attract local and international interest from buyers seeking a secure lifestyle with affordable entry price of approximately R3 million.
    • 20 Mar 2018
      Property owners in the Durban CBD are addressing the affordability challenge that faces many prospective tenants in their area – and reconfiguring the inner city rental market in the process.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us