BUSINESS NEWS - Many home sellers can't afford to commit to the purchase of a new home until they have found a buyer for their existing home. They simply can't qualify to own two homes at once.
And even if your bank will allow you to carry two home loans for a short overlap period, it may not be wise to take this approach, says Charles de Kock, principal of Chas Everitt Southern Cape.
"It is true that there are some advantages to buying your new home before you sell your existing home. You know where you'll be living next, when you can take occupancy and how much you'll be paying.
Also, homeowners who have outgrown their old home may find it easier to move before the marketing process begins. The property can then be 'staged' for sale, reducing the stress of viewings - especially on families with small children and pets."
Buying first also removes the risk that you'll have to move twice. Many repeat home buyers have had to move to an interim rental property because they couldn't find a replacement home by the time they had to turn their home over to the new buyers, he says.
"All of this takes money, however, and you need to be prepared if, for example, the transfer and registration of your new home takes place before you manage to sell the old one. If the market slows for some reason, it could take months longer to sell your home than you anticipated. The cost of making double home loan payments every month adds up very quickly, and then you might feel pressurised to reduce the price of your old home just to ensure a sale."
So before deciding whether to buy first or sell first, says De Kock, you should find out the current market value of your home. "Ask your agent for a comparative market analysis (CMA) and for information about the current market conditions in your area. Is it a buyers' or a sellers' market in your suburb? In a sellers' market, there will be more demand than supply, and the chances of a quick sale are much higher than in a buyers' market, where there is more supply than demand."
In addition, he says, you should establish whether there are any problems with your home that could make it difficult to sell. Is it located across the street from a noisy school? Is it next to a busy freeway? Does it lack a garage or a second bathroom? Is the floor plan awkward?
"Armed with this information, you will be better able to assess the risk of buying first. If it's likely that your home will sell quickly, it may be worth the risk of buying before selling. But if the marketability of your home is questionable, or sales in your area are currently slow, you should seriously consider taking the more conservative route of selling your current home before buying another."
For more information or to list your home for sale, give Chas Everitt Southern Cape a call on 028 514 2202 or 044 690 3054, and their operators will put you in touch with an agent to assist you.
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