Unless you were living with your parents, you’re probably thinking about selling your old place before you move into your new one. Very few people have the money or the time to maintain two properties at the same time, so it only seems like a wise choice to make a profit out of your previous dwelling to prepare you for the new one. If you were thinking about selling your old house and buying a new one at the same time, which is actually quite a common occurrence, you might be setting yourself up for a world of headaches and property disasters.
The problem with buying and selling at the same time
There are two major things that homeowners think about when switching spaces – the first is that they make the biggest possible profit out of their old house; the second is to buy a new property offering the best value for money. Although it might seem like a smart idea to sell your house now and buy at the exact same time, there are lots of different things that could go wrong with this kind of strategy.
Let’s say you managed to find an affordable property and according to your calculations, the money you would make off of your old dwelling would be more than enough to cover the expenses. You talk to your agent, decide you want to buy, take out a loan, and sell your previous place at the same time. One of the problems that could arise is the absence of a buyer. It’s one thing to advertise your house as for sale and a completely different thing to actually make a sale. In some markets, the demand is high enough to warrant the risk – but it could potentially happen that your house stays on the market longer than expected. You’re left without the funds you need to pay off your new purchase.
Another thing that might foil your plan is the value of your old property. You might set it at a certain price, but buyers will haggle and ask for deductions. This means you might not be able to get as much out of it as you had hoped. With faulty computations, your old house may not be able to bring around a profit big enough to cover your new expenses. This being said – you could be one of the lucky few whose house goes into a bidding war! – deciding if the reward is bigger than the reward remains the focus question in this situation.
What you should do instead
Selling your home before buying seems like a much less risky bet. This will give you a better understanding of where you stand financially, and will equip you with the right knowledge of your financial flexibility to help you make the right choice when buying. Remember, it’s always riskier to buy without a clear idea of what you actually have to spend. Besides, you wouldn’t go out shopping with just a few dollars in your wallet anyway, would you?
YNM Real Estate
1300 588 855