The process of selling and buying a house doesn’t get easier, no matter how many times you’ve been through it before. You’ve got to get your property valued, sort your finances, arrange viewings and that’s before you’ve even thought about looking for a new house yourself.
Trying to do too many things at once will leave you wondering if there’s an easier way around this…
That’s when you start to think about buying and selling at different times. Should you sell your house before buying? Or should you be buying a house before selling? Does this make it any easier?
All good questions, all ones which we’re going to explore today!
Alongside answering should you sell your house before buying, we’re also going to look at the general process of selling and buying a house, as well as the pros and cons associated with buying first or selling first.
Not sure where to start? Use this menu to help guide you, or just get scrolling:
- Process of selling and buying a house
- Pros and cons of buying a house before selling
- How to buy a house before selling yours UK
- Pros and cons of selling before buying
- Should you sell your house before buying?
Process of selling and buying a house
When deciding to sell your property and buy a new one, it’s important to understand what the process of selling and buying a house is, if you’re choosing to do them both at the same time.
Whether you’re a serial mover or a first-time buyer, it’s always important to understand the process and learn ‘what happens when’.
This is where we come in! Let us guide you through the buying and selling process, to make you ready for the journey ahead…
- Get your property valued – Whether this is using an online valuation tool or inviting one (or more) estate agents round, you need to get a rough idea of the value of your property. This is crucial to knowing how much you will be able to afford when looking at other properties and will help with getting your mortgage offer
- Sort out your finances – Once you have a rough idea of how much you will be able to set your asking price at, you will also be able to work out how much you can afford on a new property. It’s a good idea to try break down all the costs you will need to pay for, e.g. estate agent fees, solicitor fees, deposit, removal costs, just to name a few. At this stage you should also speak to a mortgage broker and work towards getting a decision in principle. This will put you in a better position when starting to make offers
- Choose your estate agent – You will have *hopefully* had valuations from at least three different estate agents and now’s your time to choose which one you would like to sell with. We suggest that you don’t just go with the highest offer, but also looking at what the estate agent is promising to offer you
- Find a property – Arguably one of the most crucial parts of moving to a new house! You may find your perfect property straight away or it may take several weeks (or months). However long it takes, it’s important that you’re prepared it may take some time
- Find a buyer – This part of the process isn’t REALLY under your control and more lies in the hands of your estate agent to do the ‘dirty work’. However, what you can do to help find a buyer ASAP is make sure you’re available for viewings and keep your house clean and tidy to make it present better to potential buyers
- Find a solicitor and begin conveyancing – Conveyancing is the part of the process which will get you from just having an offer to exchanging and completing. It’s important to have a good relationship with your solicitor as they will be one of your main points of contact for updates on how the process is going. You may also need to apply some pressure to your solicitor at times, so it’s important to have a good relationship so they take your requests on board
- Set exchange and completion date – This will also be up to your solicitor to sort out but make sure you set a rough exchange and completion date early on, so you know what date you’re working towards when trying to organise removals
- Organise the move – You know arrange removals, sort out what’s happening with electricity, gas, water, wifi – all the important bits that are easily forgotten!
- Move out – You’ve made it! *BIG sigh of relief* Time to get the removal men in, hand over your keys and go collect the new ones!
We know this may sound a lot of stress, making you start to think about whether or not it would be easier to buy a house before selling. And that takes us perfectly onto…
Pros and cons of buying a house before selling
If the more traditional process of selling and buying a house at the same time isn’t for you, then you could look into buying a house before selling. However, like with anything there’s upsides and downsides to doing this, which we’re going to talk through for you now…
- Removes part of the chain – By buying a house before selling, you’re stopping any property chain below you, meaning you’re not waiting on your house to sell to be able to buy. This means there’s less stress and you become a more appealing buyer to any seller, as you won’t be slowing the process down
- Less risky to seller – As you’re not waiting for the sale of your property in order to buy, you are less risky to the seller, as there’s no chain below you who could pull out of the sale, causing the whole process to fall through. As a result of being less risky, you’re less likely to be gazumped, as even if a higher offer is put in by another buyer, the seller will likely still stick with you, due to you carrying minimal risk
- No pressure – As there’s no push from selling your property, you have as much time as you want to find the ‘perfect property’ for you
- Can time the market – When buying a house before selling, you can pick your timings. For example, you could buy a property whilst the market is cold and then sell your property when the market is hot. This way you’re more likely to get a higher price for your property whilst paying a lower price for your new home
- Second home Stamp Duty – When buying a house before selling, this will mean you own two properties, meaning you will have to pay second home Stamp Duty Land Tax (SDLT) rates. Anyone buying a second home over the price of £40,000 is subject to this and the rates are 3% higher than SDLT on a main residence. You are able to claim this back, however, if you sell your other property within 3 years of buying the new one. If you want to work out how much SDLT you would have to pay, this helpful calculator may be able to give you some answers
- Capital Gains Tax – You don’t have to pay Capital Gains Tax (CGT) if you sell and buy a property at the same time but if you buy a house before selling, you will be susceptible to CGT when you sell your old property. CGT is a tax paid on profit made when selling an asset which has increased in value. If you’re wanting to know more about CGT, have a read of this
- Ability to afford – With buying a house before selling, there is the ultimate problem of working out how you can afford to buy a new property without selling your current one. We’re going to cover some options in more detail in the next section, so stay tuned…
How to buy a house before selling yours UK
Okay so, you’ve read the pros and cons and have decided you’d like to try buying a house before selling yours. Great… just one small problem – how do you buy a house before selling yours?
A good question! We’re going to give you some things you’ll need to look out for, as well as answering ‘how to buy a house before selling yours UK’.
Things to look out for:
- Sellers aren’t normally keen on accepting an offer from a buyer who hasn’t sold their home, as this will slow the process down. To avoid being dismissed, make sure you state you’re able to buy their house before selling your current property
- Another issue you may face as a buyer who hasn’t sold their property and doesn’t have their property on the market, is that a lot of sellers and estate agents will not even allow you to view a property until you at least have your property on the market, as no one wants to show time wasters round their property. This makes it extra important for you to state your position, so you don’t get put into the ‘time waster’ category
- This one is more of a tip for you, but if you’re buying a house before selling yours, it’s difficult to know how much you can afford to pay. You may end up selling your house for less than you expected and paying too much for a new house, leaving your finances in a bad position
How to buy a house before selling yours UK
The main issue when buying a house before selling is deciding how you’re going to finance this. Let us help take some of this stress away and talk you through some of your options…
- Extend existing mortgage or remortgage – if you have enough equity in the property which you will be selling, you can release cash to fund your new home by either remortgaging or extending your existing mortgage. If you choose to remortgage, you will need to do this with a new lender, meaning you’ll have to put in a fresh mortgage application. It’s important to do this early as it can take months to get a decision
- Get a bridging loan – A bridging loan is a short-term interest only repayment loan which is secured against residential or commercial property, or land. People often underestimate the risky nature of this loan as, if you are unable to sell your old property as quickly as you expected, then the monthly interest payments can become extortionate. This type of loan is normally more ideal for those who are downsizing and so have a lot of equity in their property
Pros and cons of selling before buying
So maybe buying a house before selling isn’t appealing to you and you’re stating to think should you sell your house before buying? *hmm*
Well, once again that’s a good question. To help you come up with your opinion we’ve got the pros and cons of selling before buying listed right here…
- Stronger negotiating position – By selling your house before buying, you’re a ‘chain free’ buyer, making you more attractive to sellers. This puts you in a stronger negotiating position, as most sellers would rather buy off a chain free buyer as your purchase isn’t dependent on your own sale
- Know the exact amount you can afford – As you will have already sold your property, you will know exactly how much money you have to spend, and your offer on another property won’t be dependent upon hoping to get a certain price for your property
- No extra taxes – As there will be no cross over between houses, you won’t have to pay any extra Stamp Duty or Capital Gains Tax
- Less likely to be gazumped – Once again, as you’re a chain free buyer, it’s unlikely you will get gazumped as most sellers would rather sell to someone who doesn’t have a long chain behind them (we’re talking property chains, not literal ones!)
- Develop a good relationship – When selling your property, you’re able to develop a good relationship with your estate agent, which will be of benefit to you when you’re looking to buy a property, as the estate agent will likely send properties directly to you as they’ll be aware of what you’re looking for
- May be stuck renting – You may find that after selling, you’re not able to quickly find a property that you want to move into, which could leave you stuck renting for longer than you want to be
- Hot market – If you’re in a market where prices are rising fast, by the time you’ve sold your property and are looking at purchasing a new one, the house prices on the market will have risen making buying a new house become even less affordable
- More expensive – By this we’re referring to the removal costs = if you’re moving twice you will need to pay for removals twice, making it more expensive
- Commitment – When renting you need to commit to a set amount of time. During this time, if you find a property you like, you will still have to pay for the rent even if you move out
Should you sell your house before buying?
Ultimately, there really is no right or wrong answer here and we’re all going to have different opinions. The right answer for you will also be dependent upon your situation and what the market is like.
We know you may be looking for a more definite answer than that and so we can give you our opinion. If we were to choose, taking into consideration the pros and cons of both, we would say it’s a better idea to sell before you buy.
Because not only will you know how much you’re getting for your house and how much you can afford on another, but it makes you a chain free buyer, which is more desirable to most sellers, and putting you in a better negotiating position.
It also allows you to just keep one eye on the market whilst you’re selling your property, just in case your ‘dream home’ pops up.
Well, that’s everything you need to know about buying and selling houses in a less traditional process, including the important answer to ‘should you sell your house before buying’. What do you think? Is it a better idea to buy or sell your house first? Or is it easier to just do it all in ‘one go’? Don’t hesitate to get in touch with us today!