Buy first or sell first?

Question: Do you buy first and take the risk of selling under pressure – or do you sell first and take the risk of being stranded without a home?

 As with most things in life, there is no easy answer here; each strategy involves risk. And in the back of most people’s minds is that when the property market changes, it changes quickly and unforeseen events can trigger immediate effects to market sentiment.

 If you buy first (and you are upsizing) you are taking a considerable risk – if the market changes or your property doesn’t sell easily then it can be a financial disaster.

 On the other hand, if you sell and then nothing comes up that is suitable, you may face the dreaded prospect of having two moves. This can be incredibly inconvenient and of course expensive.

 Second question: What would be worse?

 If you have the stomach to buy first – the key to safety is to be conservative ie. under-estimate the likely sale value and allow for longer time on market of your current property; and overestimate the costs associated with buying your new home.

 In this market, people are becoming increasingly risk adverse and this is largely due to the extraordinary conditions we have experienced of late. However – this is not a normal market and at some point it will change. Stories of people being caught out and having to use bridging finance are rare these days, but it wasn’t long ago when it was a common occurrence.

 If like me, you are a fiscal conservative then I would suggest a different path and sell first. It’s a seller’s market so when you sell you have more leeway to dictate terms – not just on price but also on settlement. The best outcome is to sell with no pressure, secure the best price and elect for a 12-16 week settlement. This extra time gives you certainty on your sale price and ample time to find a new home.

 It might sound like boring advice but I say play it safe.

 David Murphy owns an independent real estate agency in Sydney’s lower north shore – feel free to call on 02 9968 2088 or email with questions david@davidmurphy.com.au