Typically, prospective property buyers sell their homes in the process of buying a new property, creating what’s known as a ‘property chain’. However, there are multiple advantages to selling a property before purchasing a new one.
Buyers are in a better position
Selling a property beforehand gives buyers more control over their situation. Many sellers favor cash buyers that aren’t stuck in large property chains. There’s a risk that the chain crumbles, resulting in buyers losing out on their desired property and sellers having to re-pay listing fees. Having the cash and being ready to buy puts buyers in a better position to close deals quickly and for a better price.
Walter Soriano of W.S London Management says that selling beforehand also gives buyers more control over their previous property. This is because being part of a chain might cause buyers to sell their homes for a lower price in an effort to speed up the process and make sure they don’t lose out on a new home.
Soriano also notes that cash buyers can often find better deals, as there are plenty of sellers looking for cash buyers to sell quickly.
Are there disadvantages to selling before buying?
As with any property buying strategy, there are some drawbacks. For instance, if buyers cannot quickly lock down a new property, they might be forced to rent for more extended periods, which will eat into profits.
The only other drawback, which follows from the previous, is that property prices might’ve gone up when buyers find their desired property. Of course, this will only apply to those that wait a year or more. However, it’s advisable to have a clear idea of the next property to avoid long delays.
Tips on selling before buying
Soriano says buyers can take specific steps to keep those disadvantages at bay. To begin with, buyers should do as much groundwork as possible before selling. That means getting mortgages pre-approved and sorting out any other administrative tasks. Doing this will mean that once the property is sold and they find a new home, they’re ready to instantly move in and reduce the chances of being gazumped.
To conclude, buyers should also thoroughly research new properties and areas to speed up the decision-making process. Knowing what to look for and where can massively reduce the interim renting period.