Please note that you are using an outdated version of Internet Explorer which is not compatible with some elements of the site. We strongly urge you to update to a newer version for optimal browsing experience.

Should I buy a new home before selling my own?

13 Oct 2015

Some homeowners enjoy holding on to their ability to live in their current home until they find a better alternative. Others don't want to make a financial commitment to a new home until their current home is sold or under contract.

Chetty says some homeowners enjoy holding on to their ability to live in their current home until they find a better alternative. Others don't want to make a financial commitment to a new home until their current home is sold or under contract.

This is according to Elaine Chetty, licensee of Seeff Richards Bay, who says factors like whether a homeowner is moving locally versus to another province or country, whether or not he or she has children in a particular school, and the homeowner's deposit play a crucial role in this decision.

Are you not sure whether you should buy another home before you sell your current one, or sell your current home first?

Chetty shares the advantages of both options so you can make the choice that is right for you:

Advantages of selling your home first

  • Deposit

The most obvious advantage to selling your current home first is that you'll cash out the equity in your current property. You can then use this money as the deposit on your next home. This is one of the most common reasons for selling first, says Chetty.

  • No contingency (subject to offer)

Many agents will write offers with a ‘subject to home sale’ clause, meaning the offer is contingent upon the buyer selling their current home within an allotted timeframe in order to free up the deposit.

Chetty says if you can avoid writing this contingency by selling first, you'll make a stronger offer, which could be a trump card in a competitive market.

In other words, selling first might help you to land your dream home before someone else has a chance to snatch it up.

  • Predictable home loan payments

By selling first you remove the possibility of needing to make two home loan payments simultaneously.

In fact, if you're able to live with friends or family during the short-term gap between selling and buying, you may be able to pocket a few months' worth of home loan payments too. This can help you to build up cash reserves to cover various moving and other expenses, she says.

  • Greater focus

If the idea of selling and buying simultaneously is overwhelming, you may find peace of mind in focusing on one step at a time.

Chetty says by selling first, you can concentrate on improving and staging your property to make it show-ready, and stay in your home while you patiently wait for the best offer.

Advantages of buying a new home before selling your old home

  • You only move once

If you sell your home first, you'll need to move twice: first to temporary accommodation and later into your new home. This doubles the hassle and results in the process dragging out longer.

In contrast, buying first ensures that you'll only need to move your belongings once, and you won't need to bother finding a storage unit or a month-to-month rental, she says.

  • Shopping time

If you buy first, you give yourself ample time to shop around for a home you love. You won't feel pressured to close on another home quickly just because your short-term lease is about to expire, you're tired of staying on your sister's couch, or the school year is about to start.

Chetty says if you're in a competitive housing market in which you might need to make offers on multiple properties, enjoying the luxury of time can be particularly valuable.

As can be seen, both options hold distinct advantages and disadvantages. The bottom line is that there is no ‘best’ answer to this question, each option includes trade-offs and your personal circumstances and preferences will be the deciding factors, she says.

Print Print
Top Articles
With a glut of rental property and flat growth in high-rent provinces, it’s a renter’s market. KZN showed rental growth above the national average, get the lowdown…

These apartments in new developments in Cape Town’s Observatory, Oranjezicht, Sea Point, Claremont Upper and more, offer a great lifestyle close to amenities. Take a look...

Fancy living in one of South Africa's prime residential estates, with a top-class golf course on your doorstep? Here are the best courses and what you'll pay for a home...

Loading

Your browser is out of date!

It looks like you are using an outdated version of Internet Explorer.

If you are using Internet Explorer 8 or higher, please verify that your Internet Explorer compatibility view settings are not enabled.

For the best browsing experience, update to the latest Version of Internet Explorer or try out Google Chrome or Mozilla Firefox.


Please contact our Property24 Support Team for further assistance. Tel. +27 (0)861 111 724