Sell first, or buy first? Key considerations for your next move

Deciding whether to sell your current home before purchasing a new one is a significant financial and lifestyle decision. The best approach depends on your circumstances, market conditions, and risk tolerance.

Some buyers choose to rent in the area they’re considering buying in next, before purchasing to ensure they make the right choice.

Below we outline the pros and cons of each option and the key factors to consider when making your decision.

Selling before buying

Pros of selling first

Financial clarity: You’ll know exactly how much you have to spend on your next home, reducing financial uncertainty.

Stronger purchasing power: With cash from your sale, your offer on your next property may enable you to be in a better negotiating position with sellers.

Avoiding bridging finance: Selling first means you won’t need a bridging loan, which can come with high interest rates and additional costs.

Less stress: You eliminate the pressure of managing two mortgages or rushing a sale due to financial strain.

Cons of selling first

Interim housing requirements: If you don’t secure a new home immediately, you may need to rent or find somewhere to stay until you buy, which can be stressful, inconvenient and costly.

Market fluctuations: If property prices rise while you’re between homes, your next purchase may be more expensive than anticipated.

Emotional pressure: Once you’ve sold you may feel in a hurry to buy your next home, which could result in compromises you may later regret.

Buying before selling

Pros of buying first

More time to find the right home: You can take your time to find a property that fully meets your needs.

No need for interim accommodation: Avoiding having to rent for the period between buying, simplifies your transition.

Protection against market changes: If prices are rising, locking in your next home early can save money.

Cons of buying first

Financial risk: Carrying two mortgages can be stressful, especially if your current home takes longer to sell than expected.

Bridging loans can be expensive: Interest rates and additional fees can quickly add up.

Pressure to sell quickly: To avoid financial strain, you might accept a lower-than-ideal offer on your current home.

The third option: renting before buying

If you are unsure about where to buy, renting in a potential area of interest before committing can be a strategic move.

Pros of renting before buying

Test the lifestyle: Living in an area first helps ensure it’s the right fit for you.

Flexibility in decision-making: Without the pressure of an imminent sale, you can take your time house-hunting.

Better selling conditions: Renting allows you to wait for an optimal market before selling.

Less disruption: If your home is on the market, renting elsewhere means you won’t be affected by open homes and inspections.

Cons of renting before buying

Added expenses: Paying rent while preparing to buy can be financially straining.

Moving twice: Transitioning from your home to a rental and then to your purchased property adds costs and effort.

Market risks: If prices rise while you rent, you may end up paying more when you eventually buy.

Key considerations for your decision

1. Market conditions

In a seller’s market, selling first can be beneficial, as homes move quickly. However you will need to consider how easy it is to purchase in the area you are looking to buy in. It may take longer than you anticipate. 

In a buyer’s market, purchasing first can offer better negotiating power and more options. However again, you need to consider how easy it is for your property to sell and if it takes longer than you anticipate, will you be able to cover the costs and associated aspects around this. 

2. Financial position

Do you have enough savings to cover two mortgages or rent if needed? Can you qualify for a bridging loan, and are you comfortable with the risks?

3. Lifestyle & stress tolerance

Are you comfortable with the uncertainty of renting or carrying two properties? Would temporary housing significantly impact your family’s well-being?

4. Timing & logistics

Are school or work commitments influencing your move? Do you have a deadline that limits flexibility?

Making the right choice

Whether you sell first, buy first, or rent before purchasing, the best choice depends on your risk tolerance, financial situation, and personal priorities.

A buyer’s agent can provide expert guidance, helping you navigate market conditions and make a confident decision.

Unsure about your next move? Contact us today to explore your options and develop a strategy that works for you!