Should I Sell My Home Before I Buy a New One?
Written by Zenyx Griffiths
31st Mar 2020 (Last updated on 15th May 2020) 7 minute read
Selling your current home before buying a new one is typically recommended as it provides you with the extra funds needed to pay for the new property’s deposit. This path can work out well if you find the right professionals to help and prepare in advance to reduce the chance of delays. However, this process also has its risks.
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?
It’s actually very common for homeowners to sell their current home at the same time as buying a new property. This is actually how a property chain is made and how multiple transactions come to depend on each other.
However, you can also choose to sell before you buy to help you build up the vital deposit. This can put you in a much stronger position when buying and it also reduces the size of your property chain which is very appealing to sellers. Even though it could aid you financially, it’s important to know that there will also be risks to consider for this process.
Although many estate agents will encourage you to sell before you buy, there is no right or wrong answer. To make an informed decision, you need to weigh up both the advantages and disadvantages and assess if it’s right for you.
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.
- Selling your home will lessen the size of your property chain and put you in a stronger position to buy. Many sellers will prefer a buyer who has the deposit ready, a short property chain and the means to provide a quick sale.
- 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 common threat 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.
- You’ll have the time to observe the housing market. You can use this to your advantage when both buying and selling property, depending on how much time you have to wait.
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:
- 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.
- You may not be able to buy quickly and will be pushed into renting before completing the purchase of your new home. Renting can be costly and so you have to budget wisely to ensure you still have the crucial deposit.
- If you keep costs down by renting somewhere smaller, there’s the issue of having to store your furniture somewhere. A storage company will, again, mean added costs.
- The property market is constantly changing and so prices can rise and fall quickly. By the time you’ve completed the sale of your property, the new house may have risen in price and won’t be within your budget.
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.
- Get your mortgage pre-approved - this will ensure the buying process moves along much more quickly once you find the perfect property for you. It will also make you an attractive buyer when you make an offer.
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.