Selling your property before finding a new home will increase the chances of locking down your dream home when you find it. However, it could also lead to a rushed decision to limit the amount of time spent in whichever temporary living situation you have set up. This is why many choose to find a home first before listing their home to sell.
Selling intricacies
“For those who chose to sell after they have found their dream home, there will be a suspensive condition in your OTP that states that the sale of the home will only go ahead once your property has been sold,” explains Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
“In situations where there is more than one offer on the table, sellers may therefore choose to reject your offer in favour of a buyer who already has the necessary financing available,” he cautions.
Those who are relying on the sale of their home to cover the bond registration fees and transfer duties as well are reminded that these costs are required to be paid upfront.
“To acquire the funds before the house has been sold, homeowners could set up a bridging finance option on their current home loan, which will be based on the equity available on the property, the seller’s credit record, and the expected cash inflow. When setting this up, keep in mind that there will be interest payable and administrative costs involved, so be sure to budget for these extra costs,” says Goslett.
Those who would like to streamline the process could choose to sell their home before placing an offer on a new home. However, Goslett then advises homeowners to have a back-up plan for a temporary living situation to ensure they have a place to stay should they be unable to find a new home before they need to move out of their current property.
According to RE/MAX of Southern Africa, possible temporary living options include:
- Paying occupational rent to remain in your current home which you have already sold to avoid moving costs and the hassle of moving twice.
- Staying with a friend to avoid paying rent or as a more affordable rental solution. This does mean you will have to move more than once, and you will also have to pay for a storage unit in which to keep all your furniture.
- Finding a short-term rental. This includes the risk of not knowing how long you need to rent a space for, as well as moving costs and possible storage unit costs if you’re renting a smaller space that cannot accommodate all your furniture.
“It may seem like a complicated and overwhelming process to those who are selling for the first time. But, selling your current home as equity to purchase a new home is common practice and financial institutions, transferring attorneys, and real estate professionals are all well versed in dealing with these kinds of transactions. Homeowners who find themselves in this position should not feel concerned or anxious about the process, especially if they have a reputable real estate professional at their side. If ever they are unsure of anything along the way, I would encourage them to lean on the guidance of their chosen real estate professional,” Goslett concludes.
Writer: Kayla Ferguson