In the world of property, buying before selling is a polarising concept that is regularly debated amongst industry experts – so is it risky, or a good idea?
Ultimately, people sell property for all types of reasons. For some, they might want to capitalise on the current state of Victoria’s real estate market, while for others, it might be a simple case of upsizing or downsizing. Now more than ever, selling property in Australia can be both stressful and exciting, particularly if you’re trying to walk the tightrope of buying before selling.
It can be difficult to navigate the moving process when you already own your property. Many homeowners face the age old conundrum of do you buy and then sell, but then have to worry about financing the new purchase? Alternatively, the second option is should you sell and then buy, but risk having nowhere to go once your sale is finalised?
While usually considered to be the risker move, there are benefits to be considered if you’re weighing up buying before selling. Although nobody wants to find themselves with two mortgages that weren’t planned for, the good news is that the process makes sense in the current seller’s market.
Unpacking The Concept Of Buying Before Selling
The arrival of COVID-19 to Australian shores in early 2020 marked the perfect storm for the Australian property market, and sparked the three integral pillars that formed the national property bubble: record low interest rates, government stimulus packages, and a local market hungry to buy. Restrictions on international travel and social distancing measures also introduced a change in spending habits amongst buyers – many of whom funneled these funds back into their savings, often to buy their first home.
While nothing lasts forever, Australia’s current property bubble means that buying before selling means that you won’t find yourself potentially renting while waiting to find your next home, or panic buying to secure a new abode before the market shifts. Given the fact that the typical Australian home owner has become $131,236 richer on paper over the past year on property value alone, it should come as no surprise that properties are receiving offers and secured with contracts of sales before they even get a chance to be listed online.
Regional prices have risen more than twice as fast as capital cities, and the latest home value data released by Core Logic shows that prices jumped by 22.4% over the past year, the biggest increase since June 1989. If you’re a homeowner looking to swap abodes, 2022 presents a unique window of time to nail the fine art of buying before selling.
Buying first isn’t an option for some homeowners looking to upgrade, but high income earners with good equity are better equipped because securing finance for the new purchase is easier. With some homeowners spooked at the prospect of Australia’s property bubble bursting, it’s also possible to negotiate a conditional offer. In some states, buyers can even add a clause of “subject to sale of existing home” in the contract of sale. If the vendor accepts this, then they are willing to wait for you to sell your home before settlement within a specified date.
Either way, buying before selling is a big decision, and not one that should be made lightly. Getting it right requires a great deal of research, confidence in the market, and relatively stable finances. It’s risky business if you don’t have the means to support two mortgages, but the good news is that help is out there for those needing some guidance.
Regardless of whether you’re a savvy investor, or are simply looking to downsize from the family home, the services provided by a property advisor can be invaluable when it comes to buying before selling. As an example, your advisor would likely research the property, local agents, check the zoning, evaluate market conditions, and communicate clearly with you regarding all of your options – but where do you find one?
Take The Stress Out Of Selling Property
As a completely free service, Emergency Services Property Advisors provide property advisor services to Police, Fire, Ambulance and S.E.S personnel and their families right across Victoria.
Luke and the team at ESPA are passionate about providing support to some of Australia’s most valued public servants. Along with key industry insights, ESPA also works with a broad range of service providers linked to the real estate industry such as conveyancers, trades, legal practitioners and mortgage brokers.
If you are an emergency services worker looking to potentially buy or sell property in the future, please get in touch with Emergency Services Property Advisors today to discuss how we can turn your real estate dreams into reality, or call Luke directly on 0414 757 705.
