We would like to move and get a house with more space and a garden. We’re worried about what we’ve been hearing about the market, that we will be outbid and may struggle to find a place. Any advice? Should we wait to put our house on the market before we find a place or sell first?
I’ll start with your last question. The answer is a definite “sell first” and I say that in the full knowledge of the obvious conundrum it tees up: that by selling now you may have nowhere to live in the meantime.
In my office, when making appointments for prospective purchasers, we always ask: “How are you going to pay for this house?” To be told often: “We’re paying cash.” When we inquire further we often realise they intend to pay cash once their own house is sold, and further inquiries reveal that the house is not yet on the market. Following the same theme, we’re often told, “we’re getting a mortgage/we have our loan approval”, followed by “we just have to sell first”. The issue is that they can’t buy now and sellers usually can’t wait.
My colleague often uses the phrase: “You’re living in your cash.” In other words, without bridging finance (long since gone), you can’t pay for the house now. I know some agents will not allow a viewing unless the funds are in place, and while we don’t adopt that draconian approach, you certainly must be able to complete the sale at the time of bidding, which may rule you out of bidding on most properties. Exceptions, of course, apply, but the general rule is still the same.
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In an ideal world, you should sell now, arrange your new loan approval and find alternative accommodation while you wait for a new opportunity to crop up. This means that when the new house does arise you are ready to act at short notice. There are several risks; if the market races ahead after you’ve sold you may not be able to afford your location or property type of choice, your job or health status may change in the meantime, securing alternative short-term accommodation may present difficulties, and so on.
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Another way to look at it is that you take the chance; put your house up for sale and a new house might pop up allowing you to co-ordinate the sale of your old house with the purchase of the new. Or you may be lucky and having seen a property you like, you avail of the opportunity to get your old house on the market quickly. But this strategy relies heavily on blind luck to succeed. You will be in a “chain sale” and chains frequently break. My issue with such chain sales (where the buyer has to sell first) is that I have no “line of sight” with the people behind my buyers. I always carry out a due diligence check on my buyers in addition to getting their approval in principle. I ask: Are they in the probationary period in employment? Are they aware of the necessity of life cover for their mortgage? Are they in high-risk or high-commission-based employment? And these are questions I can’t ask of their buyers.
Furthermore, the entire conveyancing process, coupled with the lengthy mortgage process, is painstakingly slow, meaning most sales are taking months longer than they should to complete and “fall-throughs” are more frequent. It beggars belief that a speedier and efficient conveyancing and mortgage process cannot be worked out. I am hugely critical of the inefficiencies of the legal profession and mortgage process. Solicitors frequently won’t pick up the phone to the other side, banks leave file checking to the last minute, the importance of early-life cover is not emphasised – the list is endless. To add another link to the chain is a place most won’t want to go.
Some purchasers are financially strong enough to finance the onward purchase independently of the sale of the current house, but this may not be an option for you.
In summary, notwithstanding the risk, the prospects available once you’ve sold first far outweigh the effort and potential missed opportunities of trying to co-ordinate a sale and purchase together. Buyers need to be motivated and ready to act fast in the current market and selling now is a demonstration of that motivation.
Ed Carey is a residential estate agent and a member of the Society of Chartered Surveyors Ireland
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