Should I Sell My Home Before I Buy a New One?
Most people sell their current property at the same time as buying a new one. This means they can complete both transactions on the same day and move from one property to the other.
But some people choose to sell their current home before buying a new one. While this can be beneficial in many ways, it can also present some additional challenges.
To help you understand the process of selling a property before buying a new one, Compare My Move has used the advice and guidance of our property experts to create an article with everything you need to know. From the pros and cons of the process to our top tips, this guide will help you know whether it’s the right decision for you.
Should You Sell Your Home Before Buying a New One?
The majority of home-movers sell their current property at the same time as buying a new one. When several people do this it creates a property chain.
Each transaction in a property chain is dependent on the other transactions going ahead as planned. If someone further up (or down) the chain pulls out of their transaction, the whole chain can collapse which will cause delays for everyone.
For this reason, some people will sell their current home and then buy another at a later date. The main advantage of this is that it makes you “chain-free”.
This will be attractive to vendors as they know they won’t be waiting for people lower down the chain (i.e. the buyer of your house and the buyer of their house, and so on) to be ready to proceed before the transaction can be completed.
Being chain-free means you’ll be ready to exchange contracts when the conveyancing work has been done and your mortgage is in place.
If the seller doesn’t have an onward chain, the transaction can be completed even quicker.
The Advantages of Selling Before You Buy
To help you see how selling your home before buying can be positive, here are some of the many possible advantages:
- You can benefit from receiving the money from the sale of your property. This then provides you with a better understanding of your budget and how much you want to spend.
- It can lower your chances of being gazumped. Your position already makes you an attractive buyer, so if you provide a decent offer, the seller will be less likely to accept another. In 2019, Market Financial Solutions (MFS) discovered that 31% of UK homeowners lost out on a property due to gazumping. The more you can lower the risk of this the better.
- You will gain more control. As you won’t need to make a quick sale, you won’t be pressured into selling your home for lower than it’s worth. You are in a better position to negotiate in both transactions as time is on your side.
- If you find a seller looking for a quick sale, you may be able to get a better price on the property you’re buying.
- If house prices are falling, you can wait a while before you buy your next property and get it for a cheaper price than you would have done previously.
The Disadvantages of Selling Before You Buy
Despite the many advantages of selling your home first, there are also a few risks and disadvantages to consider:
- The big issue with selling before you buy is: where will you live? Unless you can move in with family of friends for the short-term, you’ll probably need to rent a property. Most rental contracts are for a minimum of six months so you will need to bear this in mind when buying another property. Renting will eat into the proceeds of your previous home sale.
- If you keep costs down by renting somewhere smaller, there’s the issue of having to store your furniture somewhere. A storage company will mean added costs.
- If you sell first without researching properties to buy, you won’t know if the money you made will actually be enough to go towards your new home.
- If house prices start to rise, the type of property you plan to buy might rise in price. Meanwhile, you won’t benefit from rising prices as you’ll have already sold your property.
Keep in mind that, even though renting can be stressful and financially draining, being in a chain or being gazumped can also be upsetting. There is no clear answer as to whether you should sell your old home before buying a new one, it fully depends on you and your personal circumstances.
Tips For Selling Before Buying a New Home
Here are our top tips to ensure a smoother process when selling a property before buying a new one:
- Get organised - it’s important to gather all the necessary documents for the sale and prepare everything in advance. Ensure you have a Mortgage Agreement in Principle, a conveyancer, anything you know is vital for the process to continue. Don’t forget to compare conveyancers early on, to ensure you’re ready to start the transaction.
- Do your research - before selling your home, make sure you do your research to figure out where you want to buy, what property type you’re looking for and what your budget will be.
- Decide on an asking price - when preparing to sell a property, you need to decide on an asking price. Compare prices with other properties in your area and don’t be afraid to talk to your estate agent.
- Don’t waste time when waiting to sell - use your time wisely whilst you’re waiting for your home to sell. Keep an eye on the property market and keep searching for your dream house.
- Talk to multiple estate agents - this can help when setting an asking price as, according to the Department for Business, Energy & Industrial Strategy, 75% of sellers asked more than one agent to value their home in 2016 when preparing for the sale. Developing relationships with multiple agents will also ensure you can view multiple properties and are on top of their contact list when a new home is available.
Can You Buy Another Home Before Selling Yours?
Yes, it is possible and very common for people to buy a new home before selling their previous one.
If you’re buying a home before or whilst selling another property, it’s important to know that there will be a range of risks to consider as well as an increased chance of delays. It would lengthen the property chain you’re in and double your workload.
Selling your home before buying a new one would provide you with the necessary funds to pay for the deposit. Buying before selling does not provide you with these extra funds and so it can be difficult to work out a budget. However, there are advantages to both and so it’s important to weigh up your options and calculate what you can realistically afford.
If you're selling a property with help to buy loan, you will need to do your research. Talk to your conveyaner for their expert advice.
How Long Should You Own a House Before You Sell It?
In the UK, there is no law stating a minimum period of time a homeowner should wait until selling their home. Ideally, the owner should be able to sell the property whenever they see fit.
However, some banks, building societies and mortgage lenders won’t lend buyers the necessary funds to finance their purchase if the seller has owned the property for less than 6 months. Selling before the 6-month period could limit interest in a property but it doesn’t mean it’s impossible.
Saving Money During the Moving Process
Whether you’re buying, selling or both, it’s important to set yourself a budget and find the quotes suited to you. From conveyancing solicitors to removal quotes, Compare My Move has a network of verified and experienced professionals to help you through the entire process.
Don’t just hire anyone. Shop around and find those who are experienced, qualified and reliable to help you through the different aspects of moving house. By hiring verified professionals like property surveyors, you’ll be saving a lot more money in the long-run and increase your chances of a smooth and successful process.