How to Buy and Sell Your House at the Same Time?
Buying or selling a house can be an exciting yet challenging task. Unless you are a first-time buyer, it is common for homeowners to sell and buy at the same time, ensuring you become part of a property chain. From the various agreements and paperwork involved, to whether you should buy or sell first, there are many challenges you will face when it comes to buying and selling property at the same time.
Compare My Move works with property experts to bring you the latest and most useful information on buying and selling property. In this article, we look at the steps and effective ways of selling and buying a house at the same time in the UK. This will provide you with the tools and information you need to prepare for both transactions, putting you in the best position when it comes to starting the process.
When it comes to buying and selling a house, property chains are one of the biggest causes of delays. A property chain is a “chain” or line of buyers and sellers linked together because their transactions all depend on each other. Many people will need their house to sell in order so they can purchase a new home. When both buying and selling at the same time, you become part of a bigger chain.
A property chain typically starts with someone who is buying but not also selling, for example, a first-time buyer. The end of the chain is someone who is selling and not buying. Usually, everyone in-between will be both buying and selling a property, with each transaction depending upon the next.
Why Are Property Chains So Problematic?
In an ideal scenario, you would sell to a first-time buyer, who is not part of a property chain, and purchase a property with no onward chain. Unfortunately, this is not a common occurrence and you will most likely be part of a chain, either selling your house or buying your next one - and very often it can be both.
According to Yes Homebuyers, 1 in 3 property chains will break. One delay in this chain of buyers can and often will impact every other sale in the chain. Delays can come as a result of financial issues, being gazundered, problems flagged in a survey or delays in the conveyancing. Unfortunately, delays further down the chain are out of your hands and you must wait for these to be resolved before you can proceed.
The Benefit of Selling to a First-Time Buyer
The main advantage of selling to first-time buyers is that they will most likely not be part of a property chain. They will be ready to move in without waiting for a house to sell or relying on any other transactions linked to their own. This means that the selling process will most likely be quicker, allowing you to complete the sale and buy and move into a property once you have found your dream home.
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Advantages of Selling Your House First
There are a number of advantages to selling your property before you buy your new home. Below we’ve listed some of the top reasons why this could be the best course of action when selling and buying at the same time.
Stronger Position as a Buyer
If your house is sold, you have cash in the bank and no chain, this makes you a very desirable candidate to the seller of the property you are looking to buy. Not being part of a chain will be seen as a huge advantage, allowing you to potentially negotiate on the price. You will also be seen more favourably by both the estate agent and the seller.
Strong Position as a Seller
If you have decided to sell before buying, and have a plan of where to live until you find a property to purchase, this puts you in a good position as a seller. You won’t be in a hurry to sell and can therefore wait for the right offer from a promising buyer, rather than accepting a cheaper offer to sell the house quickly.
Good Financial Position
With your property sold and the money in the bank, you will know exactly how much you can spend on your next property and be able to budget accordingly. You may also be seen more favourable in the eyes of a mortgage lender. The stronger your financial position, the more likely you are to be offered a competitive mortgage deal.
Disadvantages of Selling Your House First
Despite the obvious advantages of selling your home first, as listed above, there are some downsides. Below we take a look at a few reasons why selling your property first could put you at a disadvantage.
Where Will You Live?
The main disadvantage of selling your house first is of course, where you will live once the sale is completed. If your house has sold and you are yet to complete your own purchase, you will find yourself needing accommodation.
In the short terms, this can mean moving in with a friend or family, or even a hotel if you need and can afford to. However, if it is for the long term, you may need to consider renting until you find your next home.
Increasing House Prices
The longer you wait to purchase a new home, the more risk you take of having to pay a higher price for a property when you are ready. House prices will increase over time and despite economic turbulence in the UK, have done so consistently for the last few years. This could limit your options when buying a new home if properties have increased above your price range.
Making an Offer on a House Before Selling
Once you have found a property you want to buy, you can make an offer. Most buyers will make an offer lower than the asking price which the seller can either accept, reject or negotiate.
If you find your dream home before selling your existing property, you can submit an offer to the seller. However, if your offer is accepted and the sale goes ahead, this will mean needing a quick house sale to avoid being in a position where you own two properties at once.
The risk of putting your sale under pressure is that you may be tempted to accept a lower offer for a quick sale. This potentially leaves you with fewer funds than you may have planned to have when making an offer on the new property.
What Happens If You End Up Owning Two Properties?
If you make an offer on a house before selling, you could find yourself in a position where you own two properties at once. This leaves you in a highly disadvantaged position as a seller as you will be looking to sell the property as quickly as possible, tempting you to take a much lower offer.
Unless this is something you can financially afford to do, it is wise to avoid this happening. Owning both your previous home and your new home would mean paying two mortgages, bills and council tax on both properties and any other overheads which apply to both homes.
If you do find yourself in this position, you will want to achieve a sale for your original property as soon as possible. Keep in mind that a mortgage lender will most likely not approve a second mortgage if they think you cannot afford it.
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What Can You Do to Keep the Process Moving?
Although you cannot control what happens above and below you in the chain, you can influence your own transaction in some ways. From simply being organised to exploring Bridging Loans, below we look at a few ways you can keep the process moving and avoiding a break in the property chain.
A Bridging Loan is a short-term, high-interest rate loan designed for those looking to complete a property purchase before selling their existing home. This offers you the funds you need at the time of buying before the funds from your sale comes through.
If you have found your dream home, but have yet to sell your current property, this may be an option for you. However, be aware that this is a costly way to borrow money and is only designed as a short-term solution.
For more information on Bridging Loans see: What is a Bridging Loan?
Use a “Quick Sale” Company
If you have found the home you want to buy, but are struggling to sell, a “Quick Sale” company could be an option. However, keep in mind that selling via one of these companies may not necessarily get you the price you were looking for. They work on the basis of buying homes quickly, but at a discounted price.
However, this could be a small price to pay if it means a quick sale and not losing your dream home. Make sure you research these firms if you decide to go ahead with this to ensure they are reputable and read any and all small print to safeguard yourself and your home.
Sell to a First-time Buyer
As we’ve mentioned above, selling to a first-buyer usually means they are not part of a property chain. This means they are ready to move in at any point, with no delays on their end. This can be a huge advantage when buying and selling at the same time.
Buying a New Build
Buying a brand new home will mean there is no chain ahead of you. This means you won’t be waiting on another transaction nor will you be waiting on someone else to move out of the home. Be aware, however, that new build properties can come with their own delays, such as construction not running to schedule.
For more information on buying a new build see: Guide to Buying a New Build
As we’ve mentioned above, if you sell your property before buying another, you will need to find accommodation. It may be worth considering renting until you find your perfect home. If you have found a property and are in a hurry to sell, you risk taking a lower price. If you have sold and need somewhere to live, you may rush into buying a new home before careful consideration.
Although renting can be costly, it may be worth doing so to give yourself the time to find a home you really want. It also means you will no longer be part of a chain, making you a more desirable candidate in the eyes of a seller.
Communication and Organisation
Having all the relevant paperwork and information in order - and submitted in good time - is essential for a smooth process for both buying and selling.
You can help yourself by keeping in constant communication with your conveyancer and any other parties involved in either transaction. This will ensure nothing is missed and the process doesn’t come to a halt due to missing documents or misunderstandings.
Next Steps of Selling a House
This article has been part of our selling a house guide. Once you have an understanding of selling and buying at the same time, you can start to prepare your house for the sale, which we look at in-depth in our next article. To learn more, read preparing your property for a sale.