We are currently paying off a house, but want to sell and buy in a more convenient location. Currently have 2/3 equity, expecting to pay no more than 30-40k more than this house is worth, might even get something at a similar price. We're on one income.
a) sign a contract on a new house then put the current house on the market, and deal with a (hopefully) short period of astronomical payments on a bridging loan.
b) sell current house, rent until find a new house. In the past 12 months or so that we have been watching the market there have been 3 suitable houses come up, but we haven't been in a position to sell yet.
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30-04-2012 09:38 #1
Real Estate Question
30-04-2012 09:53 #2
I would sign a contract for a new house, but put a condition in there that states you have to sell your house first (this is called subject to sale). You can make this a 90 day clause and that gives you 3 months to try and sell your house.
Other than that...I would not sign a contract on a new house until my old house was sold. The market is absolutely shocking right now (but it is bouncing back slightly) so I would be reluctant to sign a new contract before selling.
30-04-2012 10:48 #3
As hard as it is and as risky as it sounds, the best thing to do is to sell before you buy. You can only guess how much your property will sell for and what happens if there is a crash in the market a month after you buy? It's risky cause you could end up having to move out of your current house & have nowhere to go, but it's not so financially risky as you know exactly how much money you have to play with when you go house shopping.
We're looking at moving too and all I can suggest is to make sure you take moving/selling/buying costs into account. We're wanting to move from our house to one of similar value and we're realistically looking at $50,000 just to do that. It's about $13,000 in real estate agent costs, $30,000 in stamp duty on the new property and the rest will cover getting the house ready for sale and the actual costs of moving. That's $50,000 gone in an instant. Really sucks.
30-04-2012 10:55 #4
30-04-2012 11:01 #5-
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I wouldn't bridge I'd sell and rent, or even better put subject to sale on a house you like THEN put your house on the market (or put it on the market first and start looking for a new house to put a subject to sale offer on).
30-04-2012 11:03 #6
Just be careful that you don't put yourself in a position of having to drop your price just to get rid of your existing house to get the new one. A lot of experts recommend not buying a new house until you have sold your existing house.
30-04-2012 11:07 #7
I would put your home on the market now and actively start looking, if you sell before you have found the ideal home, only agree to the price if you can have a longer settlement time ( say 12-16 weeks) which then gives you 10 weeks to find a home knowing exactly how much money you have to spend
30-04-2012 11:26 #8
You are all telling me pretty much what I thought the answer would be. Sell first.
I've done the figures and worked out that for the short term - say, no longer than a year or two - it's not going to be any difference financially to our current position, unless there is a drastic change in the market. In that time we should be able to find another house to buy.
The area we want to move to is one of those 'buy to live forever' areas, so not a lot comes up for sale, and most are either heaps bigger than what we need or old and need a lot of work. But there have been three suitable houses come up in the last year, and I'm sure there will be more come up.
30-04-2012 14:07 #9
It's a great time to buy a house, but a bad time to sell.
Be extremely realistic about what you think your house will sell for. DH and I just went through a similar situation, however we had 2 houses - the house we lived in and an investment property.
We started preparing to sell both properties 13 months ago. Over that time house values have dropped a fair bit. Our investment property sold for 50K less than our original asking price (took 10 months to sell). Our other house has dropped in value to almost the same amount (it's still on the market though).
Ideally we would have sold both houses before buying and rented somewhere in the interim. However things happened and we ended up having to buy a house very quickly, so we now have 2 mortgages again and an unrented property (yikes).
We're able to cope financially at the moment, but it's very scary to look back at our original (and very modest) guesstimates of what we should have profited from the sale of both houses (we're budget nerds).
My only advice is to make a realistic 'worst case scenario' budget and if you can't possibly cope with that financial situation, then definitely don't buy before you sell. The market is too flimsy at the moment to gamble with mortgages.
30-04-2012 15:03 #10
We did a) with bridging finance when the market was good, never again, it was incredibly stressful. Thankfully we only had to make 1 bridging payment before house sold but next time we will sell first. Dont forget fees etc will set you back tens of thousands so even if you buy for same amount you sell you will still need extra funds.
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