In the current market, it is undoubtedly better to sell your existing home before setting out to buy a new one. It is possible, of course, to make the purchase of your new home contingent on the sale of the old one, but this really does tend to complicate matters.
For a start, sellers are often reluctant to accept contingent offers. Most offers are already subject to the buyer obtaining the necessary bond finance, and with home loans being difficult to come by these days, sellers don’t want the added uncertainty of having to wait and see if the buyer can sell his existing property before finally committing to the deal.
Most sellers realise that accepting an offer made on these terms could mean taking their property “off the market” for two or three months while the buyer tries to sell their own home – and having to start marketing all over again if they fail to do so and the deal falls through.
Added to this is the problem for the buyer of trying to qualify for a new home loan before he has sold his existing property. Most people simply can’t afford to pay off two loans at once so the banks won’t grant one without the other having been cancelled – and that takes the deal right back to square one.
On the other hand even if the seller is prepared to accept a contingent offer, the buyer may then feel such pressure to sell his existing home within the 60 or 90 days allowed that he will accept a lower offer for the property than he could have got.
Of course, many homeowners are afraid that if they sell first and have to move out within a couple of months that they will really be under pressure to find a new home and end up paying too much.
Fortunately, however, there are some practical ways to avoid this problem, one of which is to put your home up for sale with the provision that you will be allowed to stay on for a pre-agreed period after the sale – at a pre-agreed occupational rental.
This type of arrangement generally meets the needs of both parties, because the sellers know exactly how long they will have to find a new home, while the buyers have an exact occupation date.