When you start thinking about buying a new home you are likely to be caught in a dilemma. Should I be selling first or should I try and secure a new home first? There are advantages and disadvantages to both options and we’ll discuss these here. We’ll also give Evergreen Property’s opinion on which option is best. As always, everyone’s objectives are different so have a think about what your main aim is before you start searching or selling.
Your options:
(1) Buy First: The first option available to you is to purchase a new property before selling your own. You can do this by stating your offer is ‘subject to sale’ i.e. that you require to sell your own property to help fund the purchase.
The Positives: This is the option many people like to take because it gives them a feeling of security that you might not otherwise have. As long as you sell your own property in the agreed time-frame set by the sellers, you have your purchase secured. You don’t have to think about possibilities of temporary accommodation or storage.
The Negatives: Your property search can be long and arduous. You are at the bottom of the purchasers pecking order. You may have to place higher than average offers to compensate for your buying position. You may have to accept a lower than average offer on your own property to ensure you meet the time frames for your onward purchase.
It is entirely possible to have none of these issues occur and everything go smoothly, but it’s unlikely. It’s particularly unlikely in a competitive market like Edinburgh.
Alternatively, if you have the finances available, then you can look to purchase without the subject to sale clause. You will have to pay the additional dwelling supplement (ADS) surcharge of 4%. You can claim that back if you sell your current main residence within 18 months of the purchase.
(2) Sell First:
The second option available to you is to sell first. This is the typical choice for Edinburgh homeowners looking to get maximum capital gain for their purchase. It does come with it’s unique stresses that won’t be found if you buy first.
The Positives: You will be in a far stronger position when it comes to placing an offer on a property you like. You can really focus on getting the most out of your sale rather than being restricted by a time limit. You may have more capital than you expected originally if your property sells well. You are more likely to avoid the disappointment of losing your purchase if your sale falls through. There is a chance you can have the completion dates for your sale and purchase coincide.
The Negatives: There’s no guarantee of how quickly you may find a suitable property to purchase. As a consequence, you may have to find temporary accommodation whether it be rented or staying with family etc while you secure a new purchase.
(3) Get the ball rolling:
This option allows you to juggle both your property search and your property sale at the same time.
The Positives: You will be in a stronger position than those homeowners that don’t yet have their property on the market. You can place offers with your property on the market already, you’ll appear the favourable option compared to your rival buyers. The whole process has the potential to move more quickly than if you do each part separately. You kill two birds with one stone and completion dates for your purchase and sale will coincide.
The Negatives: While the overall process may be quicker, it will take up more of your time while it’s happening. You will have multiple balls in the air which can cause more stress than other avenues. You will still be in a worse buying position than those whose sales have already completed and those who have nothing to sell in the first place.
Often people who have seen a property they like will place a note of interest and then proceed to get their property on the market. This shows the seller that you are pulling in the same direction. Once your property is on the market you will be better placed to go in with a formal offer.
Our recommendation:
In a market such as Edinburgh and as people who have worked with property buyer’s for a number of years, we will always be advocates for either selling first or at least bringing your own property to market before starting your search. Due to the market conditions, the majority of properties in Edinburgh generate large amounts of competition. The chances of there being someone else interested that are in a stronger position than yourself is very high. To compensate for this buying position deficiency you will probably have to spend above and beyond what you may otherwise have paid. There have been too many examples where I have offered on behalf of a client and they have missed out, despite being the top offer, because their buying position wasn’t good enough. There is no worse feeling than missing out on your dream property.
What are you going to be comfortable with:
Ultimately, you get to decide which path you want to go down. Make sure you’re happy and as comfortable as you can be with whichever option you take forward and then commit to that approach.
If you need any advice about either buying or selling then please get in touch via sales@evergreen-property.co.uk.
