With the exception of first-time and cash buyers, most people need to sell their current home before they can afford to buy another.
The dreaded property chain — where one house sale relies on the successful sale of another — can be extremely stressful, plagued with delays and possibly result in a failed sale.
In this guide, we’ll take a look at ways to make the process of buying and selling a house at the same time run as smoothly as possible.
Moving House during COVID
House sales are permitted under lockdown, provided all parties involved adhere to government guidance. If you’re moving outside of England, you should check the rules in your destination country — England, Wales, Scotland and Northern Ireland have their own regulations.
Take a look at our handy COVID-19: Safe House Selling Checklist for guidance on making your house sale as safe as possible during lockdown.
Should You Sell or Buy house First?
Every homeowner who decides to move faces this dilemma. Do you sell your house first and risk having nowhere to live if you can’t find somewhere to buy fast? Or should you find your dream home first, make an offer and hope the seller is prepared to wait while you sell your current property?
There is no “right” answer. To decide on the best approach for you, there are several factors to consider.
- Are you looking to buy a property of a type and location that is in high demand?
Estate agents and sellers tend to favour buyers who are in a strong position, i.e. they can move fast, and there is a low risk of the sale falling through.
If you have sold your home, you’re a chain-free, cash buyer, which is the holy grail for sellers and agents. You will be prioritised over someone who has yet to put their home on the market or is in a property chain.
If your house has been on the market for some time without being sold or the housing market is “cold”, this could also put sellers off from accepting an offer from you.
Even in areas where demand is low and the market is buoyant, if you haven’t sold your home when you make an offer, it is likely to be rejected because the seller cannot be confident you can afford to buy their home — until you’ve sold your property, how can you know for sure how much you’ll have to spend?
- Is It a Buyer’s or a Seller’s Market?
Use a tool such as PropCast to find out how “hot” or “cold” the market is when you decide to sell. In a hot market, properties are selling fast (a seller’s market), and in a cold market, there is a low demand for properties (a buyer’s market).
In a hot market, you can afford to find a property you like and make an offer on it before selling your current home. As properties are selling fast, there’s a good chance you will be able to sell your home when you need to.
In a cold market, selling first will put you in a better position as a buyer. If you make an offer on your dream home, it’s likely the seller will reject this because your current house could take months to sell.
- Can You Afford to Buy before Selling?
If you’re reading this guide, the chances are that this is not an option. Most homeowners rely on the proceeds of one house sale to fund the purchase of another.
If you are in the luxurious position of having the cash to buy before selling, this is the ideal scenario. You can take your time to find the perfect home and move into it at your leisure, without the pressure of having to sell and move fast.
Furthermore, if the market is unfavourable for sellers, you can wait to market your property until prices pick up, allowing you to buy low and sell high. You may even be able to drive the price down on your new property — chain-free cash buyers are in the best position to negotiate.
Remember, if you choose this option, you’ll need to consider the tax rules on purchasing a second home.
If your only option is to sell and buy simultaneously you will become part of a property chain — your ability to buy the new home will be dependent on the successful sale of your current home. In many situations, your buyers and sellers will also be part of a chain, i.e. they’re doing the same as you, selling to buy. This is where problems can arise. If there are issues or delays with one transaction, the rest could fall like dominoes.
You can’t control the sale of properties further along the chain. The best way to reduce the risk of problems and delays is to be prepared and do all you can to help your sale and purchase go smoothly.
Prepare for Selling Your House
- Value Your House: Invite several estate agents to value your house, and do your own research by looking at prices for similar properties recently sold in your area. Beware of setting the asking price too high, as this is the most common reason why a house struggles to sell.
- Assess Your Finances: How much do you need to buy your next home? What’s the balance on the mortgage, and do you have any loans secured against the property? Assess your finances before proceeding with selling and buying.
- Prepare Your House for Sale: Make sure the property is clean, tidy and well-maintained both inside and out. Even minor repairs and a lick of paint can help your home sell more quickly.
- Gather Documentation: You will need to provide the buyer with various documents including proof of your identity, an Energy Performance Certificate (EPC) and HM Land Registry title documents. Gather this early in the sales process to avoid delays later on.
- Decide How to Sell: Selling via an estate agent on the open market can take many months. If a quick house sale is important to you, consider selling at a traditional or modern auction or using a house cash buying company such as House Buyer Bureau — we can buy your home in as little as 7 days.
- Conduct Viewings: If you’re selling via the traditional on market method, you’ll need to host viewings. During the pandemic, virtual viewings have become increasingly popular, and offering this option will increase the number of bookings. If you’re selling privately or to a quick house sale company, you can avoid the stress and hassle of having strangers in your home.
- Consider Offers: If you receive multiple offers, don’t automatically opt for the highest one. Consider the buyer’s circumstances. A cash buyer will lead to a quicker sale, and there will be less risk of delays or problems. If you are in a chain yourself — selling and buying simultaneously — a cash buyer will keep the number of links in the chain to a minimum.
- Accept an Offer: Once you have an offer you’re happy with, formally accept it and proceed with the sale. The buyer will pay for a survey, which may lead to a change in the offer amount.
- Negotiate: Your solicitor or conveyancer will liaise with the seller’s solicitor to agree on the sale price and the date for the exchange of contracts and completion.
- Exchange and Complete: If everything goes according to plan, the buyer will pay a deposit, and you will exchange contracts and complete the sale approximately a week later.
A house sale on the open market typically takes around four months, although the process is currently taking considerably longer due to the impact of the pandemic. A quarter of all house sales in the UK fall through before completion, and this figure is likely to increase as the furlough scheme ends and unemployment levels rise.
Prepare for Buying
- Set a Budget: If you’ve sold your house, you should have a good idea of how much money you have to purchase a new property. If you’ve yet to sell, setting a buying budget can be trickier, as you cannot be certain how much your current home will sell for. Err on the side of caution, and under budget based on the equity you have and a low sale price.
- Prepare Documentation: If you need a mortgage, you’ll need various pieces of information such as proof of ID, address and income. There will also be a monthly expenditure form to complete. Obtaining an “agreement in principle” before making an offer will put you in a stronger buying position. If you don’t need a mortgage, you’ll still need to prove your identity and your current address.
- List Your Priorities: Unless you have an unlimited budget, there’s likely to be some compromise required when buying a new property. Having a list of “must-have” and “would like to have” property features numbered in order of priority can help you make difficult decisions.
- Assess the Cost of Buying: Don’t focus solely on the asking price. If the house needs work or is expensive to run, it could be beyond your budget. Assess the total cost of purchasing and living in any property before making an offer.
- Make an Offer: The offer will be made to the seller via their estate agent. The seller will either accept or reject your offer. In the latter case, they may indicate that a slightly higher offer would be accepted. If the offer is accepted, liaise with the agent to agree when the property will be taken off the market.
- Arrange a Mortgage: If you have an agreement in principle, go back to your mortgage lender and apply for the mortgage you need to buy your new home. You’ll need a formal mortgage offer before exchanging contracts, and many buyers will not take the property off the market until you have such an offer.
- Hire a Solicitor or Conveyancer: You will need a qualified legal professional to manage the paperwork and negotiate with the seller’s solicitor on your behalf.
- Get a Survey: When you find the right property and have an offer accepted, the next step is to obtain a building survey. This will flag any potential issues with the property that may lead you to withdraw from the purchase or to renegotiate the price.
- Agree on the Terms of Sale: Once price negotiations are complete, you’ll need to reach an agreement with the sellers on any work that is to be done before completion, what fixtures and fittings will be included in the sale, the exchange and completion date and any other factors that are important to either party.
- Exchange and Complete: You will need to pay a deposit before exchanging contracts. Completion of the sale typically occurs about a week later, and you will agree on dates for both transactions with the seller via your legal representative.
Why not avoid the hassle and delays of an on-market house sale by selling to House Buyer Bureau? We have the funds to buy your house for cash in as little as 7 days. There’s no need for viewings, and you won’t have any estate agent or legal fees to pay.