I want to sell AND purchase - which should I do first?
With the recent surge in property values in the Waikato, many of us are wondering if ‘now’ is a good time to consider selling.
If you are thinking of cashing in on your investment or personal property, a hot market such as this is ideal. Many buyers will compete for something with a good return or the possibility of increasing the value or yield of the property. Gone are the days where investors will only consider something with at least an 8.5% net return. Some investors will even look at a property with as little as 4.5% gross return if the property meets their needs.
In the case that you are simply considering selling the one you live in to buy another, any time is a good because you will be looking for something that more suits your current lifestyle, than the home you are living in now. Provided you buy and sell in the same market, the prices will remain relevant. The true difficulty is deciding whether you buy or sell first.
In a ‘fast or escalating’ market such as the one we are currently experiencing, many people are choosing to secure a property first as it is likely they will sell in a very short time frame provided the price expectations for theirs is remotely realistic. If you are considering this, it is vital you know what that realistic value is, or there’s the danger of putting yourself in a position of not being able to settle on the new purchase. This will lump you with not only an incredible amount of stress, but also a possible unwanted bridging loan or, worse, losing the deposit you have paid! There are other far less risky options, which many people either don’t consider or know about.
If you do find a house that you absolutely ‘must have’ before you have even put yours on the market; submit an offer subject to the sale of your property – allow around 6 weeks for this. If you have other conditions like a LIM, builders report, finance or Solicitors approval, allow 8 weeks. Another solution if you are not risk adverse, is to purchase this property ask for a delayed settlement of perhaps 3 – 4 months. This should enable you time to sell yours. However you must be prepared to accept what the market indicates your property is worth within that time, otherwise, you could end up in a very vulnerable position. Make sure you have an agent who knows what they are doing, one that you feel you can rely on to talk through your options. A good agent is aware of the negatives and positives of every scenario, if they aren’t; I recommend shopping around for one who does.
If you decide to sell before purchasing, make sure you have somewhere to stay before you sign an agreement to sell your home. Imagine if you can’t find a suitable home to replace it. I had a woman phone me recently in exactly this position. She’s sold and now has only 16 days left to find a property before the new owners move in to hers. She’s in panic mode. An option to stop this happening to you is to insert a clause in the agreement to sell your home, which states the agreement is conditional upon you finding a property suitable to you. Usually a 3-week time frame is fair. Longer than this could result in the buyer missing out on others they may have purchased if they were not able to buy yours. If you don’t find one – you don’t sell! Some buyers will entertain this if they want your property badly enough. Another option is renting short term so that you don't rush your next purchase just to get in somewhere.
In any market, I would first suggest you get your property appraised first so that you have an idea of how much money you will end up with once you do sell. Appraisals are free and there’s never a shortage of agents who will do one for you! We are certainly available to do this for you without any pressure on you to sell. I have been in Real Estate for about 20 years and my lovely daughter Jess is following in my footsteps working along side me. She gained her real estate license in 2014.
Please feel free to contact either of us in regards to this article or anything property related. We’ve given a lot of free advice to many Sellers and Purchasers. You can contact us at 07 839 7060 / firstname.lastname@example.org / 027 247 6564 OR Jess 027 821 0998 / email@example.com