Is it best to sell my home before buying my next property?
30 January 2023
Most people sell their current home at the same time as buying a new one, forming a property chain. While there are risks to selling before purchasing another home, there are also significant benefits.
In this article, we have highlighted the pros and cons of selling your home before buying your next property.
Sellers almost certainly prefer a buyer with cash in the bank (and/or a pre-approved mortgage) rather than entering into a chain in which their sale is contingent on you finding someone to buy your house. This means selling your existing home first puts you in a better position as a buyer.
Less chance of being ‘gazumped’
Gazumping is when a seller accepts an offer for their property from a buyer then subsequently decides to accept another, higher or better offer from another buyer.
Fortunately, in Scotland, once the solicitor acting for a seller has accepted an offer on behalf of their client, they are not allowed to accept a subsequent offer from another party. If a later offer comes in and the seller wants to accept it, the seller’s solicitor must withdraw from acting on their behalf and the seller will need to find someone else to carry out the legal work on their sale.
If you put in a reasonable offer for a property, the seller is unlikely to later accept a slightly higher offer from anyone else if it means entering a property chain.
Control over your home sale
If your timetable is not influenced by whoever you are buying from, and you don’t need to make a quick sale, you will not feel pressured into selling for less than you’ve been advised you can achieve.
Stronger negotiating position
With time on your side, those who have already sold their home before buying tend to be in a stronger position to negotiate for a better deal. If the seller is looking for an immediate move, they may accept a lower offer from you if you have already sold and are able to move quickly.
You’ll know exactly how much you can spend
Having already sold your property, you will know exactly how much you can spend on the property you are buying because you will have the money from your home sale in the bank. Buying your new home won’t be dependent on achieving the expected price on your existing one.
Make sure you’ve accounted for all the fees and expenses involved with buying a new property, including Land and Buildings Transaction Tax, to ensure you have a truly accurate picture of your finances.
Once you have sold your property, you will need to find somewhere to live before you buy your next home. If you need to rent, this could be expensive and eat into your budget.
If you rent somewhere small or move in with a friend or relative to keep costs down, you may need to use storage facilities for your furniture and personal belongings which will add to your expenses.
Change in house prices
While house prices could drop by the time you’ve sold your house and stayed in alternative accommodation for a while, there is also a chance they may increase meaning if you have an ideal property style and location in mind, this could be out of reach.
Only you can decide if selling your home before buying your next property is the right move for you. A PSPC solicitor estate agent can advise you on the local housing market and where prices are likely to go over the next year.