Buying and Selling a House at the Same Time

What do you do if you’re wondering how to buy and sell properties at the same time?

The team at Property Solvers has a number of tips that aim to help you on your way…

What Are Your Options?

Some of the options available when considering selling and buying a house at the same time are to:

Sell first and have the money ready to go house hunting and buy another property;
Sell first and wait until the property market changes to your advantage before buying;
Sell first using a home-buying company for a quick turnover;
Sell first by “selling your property back to the bank”;
Start the purchase process first using your own funds / savings and be prepared to own two properties at once;
Start the purchase process first using a bridging loan;
Start the purchase process first using a loan from a family member or friend;
Start the purchase process first using a home-buying company;
Rent out part or all of your existing property, then remortgage to fund your new house purchase…

This all may seem a little daunting, but we’re here to help you make the best decision…

What to Do First – Buy or Sell?

It’s often best to ensure that your own sale is complete before you get too heavily involved in the purchase process of your next house.

This is because:

There is less of a risk to the “property chain” (see below);
The ball is in your court – you won’t need to wait for a buyer and you can move forward with confidence;
You’ll usually have more money at your disposal after selling a house and your chances of getting mortgage in principle in place are higher;
A seller will favour you more for not being in a chain (there’s generally less hassle all round);
You’ll be able to control how you buy your next house more easily;
You’re more likely to achieve your property’s full asking price (as you’re not under any pressure to sell);
You can budget more easily;
You may be able to wait for a good time in the market to buy;
You won’t have to feel rushed when buying your next property;

The Property Chain

A property “chain” appears when there are multiple parties buying or selling properties at the same time.

Generally, there are more risks of things falling through as each sale within the chain has its own issues and challenges.

There are a number of ways in which a chain can be held up or broken – meaning yours or one of the other sales could potentially collapse – including:

The buyer or seller is slow to provide information to the estate agent or their solicitor that results in things not moving in time;
The two solicitors are slow to exchange information that causes delays;
Slow interactions between the estate agent and the buyer’s or seller’s solicitor, again, causing obstructions / delays;
Problems arising after the homebuyer / structural surveys or checks, causing one of the buyers to halt or slow down the sale in order to renegotiate;
An independent buyer ‘gazumps’ the sale – i.e. offers more than the existing buyer – causing the seller to pull out;
The buyer ‘gazunders’ the sale – i.e. decides to drop the price (often at the last minute) – causing the seller to pull out;
The buyer or seller gets cold feet and withdraws from the sale;
One of the buyers cannot get the deposit funds together in time;
One of the buyer’s mortgage deal falls through meaning one of the sales collapses (which has a “domino effect” for all involved in the chain);
There are other chain-related problems…

In short, selling in order to “free up” the funds that will allow you to complete your upcoming property purchase is a better way forward.

If not, the pressure will be on you to complete the transaction as quickly as possible so the chain can continue.

For this reason, selling your property first and buying a new one with the readily available funds to go house hunting is usually the wisest choice.

Below we expand further on some of the reasons why…

The Ball is in Your Court

If you start the process of purchasing a house before you’ve sold your own one, you may experience some hold-ups as you wait for your buyer to get everything in place.

This will bring the “chain” to a grinding halt.

It’s best not to have to wait for others to play their part.

You’ll Usually Have More Money After Selling

It’s good to have a little extra cash at your disposal when moving to a new home, whether or not you need it for a purchase.

It may also help you to get a mortgage more easily.

You’ll Have More Control Over the House Sale

Many of those buying or selling property often feel as though they are at the mercy of solicitors, mortgage lenders or the individuals at the other end of the transaction.

If you’ve already sold your property, it’s likely that you’ll feel a little more free and flexible than you would if you were still waiting.

Buying a new house after you’ve sold often means you’ll have a greater capacity to plan for the future.

You’re More Likely to Achieve Your Property’s Full Asking Price

If you’re under pressure to complete a sale within a certain timeframe, you may need to lower the asking price on the property to make it more appealing and get things going.

This might cause you to miss out on a significant amount of what houses in your area are worth.

A Seller May Favour You if You Have the Funds to Hand

If you’ve already sold your property, a seller is more likely to consider you a good prospective buyer.

This is because you’re unlikely to hold up the process by waiting for your funds to be “freed up”.

You Can Budget More Easily

If you’ve already sold your home, the funds you’ve received from that sale will allow you to more clearly understand which properties you’ll be able to afford.

You’ll also have an idea what kind of budget you have for renovations and whether you’ll have anything left over.

You May Be Able to Wait for a Good Time in the Market

If you have arrangements – such as staying with relatives or living in rental accommodation – that allow you to wait to buy a house until prices are low, you may be able to make a bigger “profit” overall.

Obviously predicting the direction of the market is never easy, and there’s often luck involved, but things may work in your favour.

Above all, the transaction will feel less rushed – you’ll know where you stand and you’ll be able to achieve greater peace of mind.

What if I Can’t Sell Before I Buy?

Not everyone can wait for their property to sell before they need to move.

Perhaps you have found a dream home that doesn’t come that often or you’ve had a good offer for your house that it makes the risk worthwhile.

Here, owning two homes at the same time, buying a property using your own funds, a bridging loan or a home-buying company are some of the possibilities you may want to think about…

Owning Two Properties at the Same Time

Some people have the finances at their disposal to be able to briefly own two homes at the same time.

This would also mean paying two mortgages, bills/council tax on both properties and other ‘overheads’ which obviously isn’t ideal.

If you decide to go ahead with this, you need to make sure that you will genuinely be able to achieve a sale as soon as possible of your original property.

This will ultimately mean having cash reserves, prepare for the worst and be very careful not to overstretch yourself.

Indeed, your mortgage company would probably not authorise this if they didn’t think you could afford it.

Some people borrow from friends or family but remember that this is likely to be a major cash input. If you lose out, they will as well.

Bridging Loans

A bridging loan is an amount of money that can be borrowed and used in the short term to purchase a property in lieu of the finances gained through the sale of a house.

There are a number of aspects to take into account when considering taking out a bridging loan:

Speed
Affordability
Flexibility
Ability to use alongside other finance
Ease of obtaining
Good early repayment options
Ability to cover all costs
Interest
Fees
Regulation

Speed: Bridging loans can be arranged more quickly than most other types of finance.

Affordability: Although you can spread the costs, the interest rates are

Flexibility: Bridging loans can be applied to all kinds of property, land and even refurbishment.

Ability to use alongside other finance: Because loans of this kind can be used as “second charge” or “third change” finance options, they can be used alongside other methods of funding.

Ease to obtain: Bridging loans don’t usually rely on the borrower having a good credit score or any other form of security, so they’re easy to arrange.

Good early repayment options: Many bridging loans don’t charge high exit fees, so you can easily repay a large amount early if you wish.

Ability to cover all costs: You can borrow up to 100% of your required funds to purchase a property, but you’ll need to prove you have good security in these cases.

Interest: One downside of bridging loans is that interest rates can be very high.

Regulation: Bridging loan lending is not currently closely regulated, so it can be hard to work out whether you’re getting a good deal.

Fees: Because of this lack of regulation, fees can vary from lender to lender and may build up significantly.

Quick Home Sales

A home-buying company can purchase your property from you directly for cash.

There are a number of things to think about when looking into organisations of this kind:

Speed
Freedom
Peace of mind
Asking price
Regulation
Reputation
Clarity
Contract types
Fees
Last-minute changes

Speed: Companies that promise to buy your home fast for cash do exactly that. You’ll sell your home directly to them – and the turnover time can be as low as 7 to 28 days.

Freedom: The faster you’re able to sell your house, the sooner you’re free from the property chain with access to the released funds from your sale.

Peace of Mind: The quicker you can close a sale, the fewer things you’ll have “hanging over you”. This will enable you to make commitments more easily moving forward.

Asking Price: One downside of using a home-buying company is that you may not receive the full asking price for your property from a company of this kind. Commonly, you’ll be paid between 70% and 80%.

Regulation: In the past, fast buying property companies were not well-managed. Luckily, new regulations have recently been put in place that make it far more difficult for a company of this kind to act dishonestly. Property Solvers is registered with trade bodies such as The Property Ombudsman (TPOS), the National Association of Property Buyers (NAPB), Trading Standards and Anti-Money Laundering (AML).

Reputation: As a result of previous shortcomings within this field, people are often cautious when considering the use of home-buying specialists. It’s always best to be careful and remember to check their reviews.

Clarity: The processes observed by some home-buying companies can be confusing. By being careful when choosing your service provider, however, you can avoid this pitfall.

Contract Types: It’s important to be clear about the contract you’re entering into with a home-buying company. It’s possible to get tied in so you’re unable to sell your property by any other means.

Fees: As it’s a direct sale, most quick sale firms will not charge you any fees and will cover your legal costs. However, remember to do your research before committing.

Last-Minute Changes: The more unscrupulous companies of the past would sometimes lower their offer right at the last minute when the seller had no other choice but to accept. This practice is frowned upon today and most quick buyers companies will not do it.

Other Options Involving Home-Buying Companies

It’s also worth noting that home-buying specialists can help you to sell your property quickly before you purchase a new one – meaning there’s more opportunity for people to push a sale through and be in a better position to buy.

Other Options Worth Thinking About

Note that there are a few options that we have not explored in detail…

For example, selling your property back to the bank is a possibility but it’s not too common these days. Mortgage prefer that you sell your property on the open market or at auction rather than take it back on themselves.

Another option is to rent your property. This could potentially mean you could kind some kind of remortgage to use to finance your next home.

Although you benefit from future increases in value and ongoing rental income, these days the process to get buy-to-let finance is quite slow.

Remember also that most tenants will not treat the property in the same way as you would. Going down this route would also have tax implications that you should check out.

Sell Your House Fast Through Property Solvers

Property Solvers is a regulated, experienced buying company that can help you to sell your home in rapid time.

They can open up opportunities for you to either sell your property very quickly before you start the purchase process – or to achieve a quick sale after buying a property.