Order of Selling and Buying?

[The Donners]

So, my partner and I are looking to move from our PPOR to another PPOR. We've never sold a property, what we would like to know is, if we have found a place that we want to purchase, do we put our current PPOR on the market first or do we put an offer in on the another property first?

What order do we do this? Thanks in advance.

 

[jezza]

Donners

I would always suggest buying first, make sure you can finance both for a period of time ( just in case), problem with doing the other way is you have already set the terms for your settlement and unless you have a place to live for a short period of time, not a lot of landlords will lease you a place for a month or two.

Jezza

 

[Propertunity]

.... or do we put an offer in on the another property first?

The problem with putting an offer on another place first is that it is virtually meaningless as you have no funds to complete the purchase without first having sold your own home.

You (probably) don't want to be in the position of having to come up with bridging finance and holding 2 x properties.

So it is always best (if you cannot afford 2 mortgages) to sell first (or at least have a buyer in waiting) before you make offers to buy another.

 

[andrew_de_a]

Definately sell first.

 

[jezza]

Definately sell first.

Why is this a definately?

If you can support both properties for a short period would you not buy then sell your current property.

I only say this as I have 3 friends who did the sell first over the last 1.5 years in Melb and all 3 regret it. 2 were having to find serviced apartments as the settlements did not correlate and a 3rd did it at the start of the recent boom and found the area he was buying into increased dramatically in competition and quickly found himself priced out of the area.

Yes if you have very limited funds this may be your only option but to me it is a bit like if you want to change jobs and you are comfortable in the job your in, you don't just resign hoping you will find a new job straight away

Jezza

 

[RumpledElf]

We're going to keep our old house and hope the rent we can get for it is enough to get us over the serviceability line for the new one.

To my mind, $20k rent should cover $200k of loan and leave all our other income for non-property living expenses, but I'm not a bank.

 

[marg4000]

If you plan to buy before you sell, be VERY conservative in the amount you think you will get for your PPOR. All the valuations from agents are usually on the high side toget the listing.

If you buy first, you are in a very vulnerable position as the agent will tell the buyers of your property that you have already bought another property. Buyers know you will be paying two mortgages.

My son recently bought a house from a person who had already bought her next house and moved in. It was easy to figure out that each month longer she retained the previous house was costing her around $4K in interest if she had the best deal possible, probably closer to $5K. He was able to buy the house under valuation (his best mate is a registered valuer) and considerably below the asking price as there had been a temporary lull and the vendor was panicked.
Marg

 

[RumpledElf]

Heh, I still have my old OLD house, but it isn't costing me per month - it is very positively geared. So I'm in no rush to sell it and have it listed on Gumtree only, BUT having two ex-PPoRs hanging around when we get onto house #3 is going to be ... interesting. Even with one at 20% gross and the other at almost 30% gross if we rent it furnished.

Its still too early for us to get pre-approval. New house we STILL don't have a price on (despite them rushing us to get the forms back so they could give us a price) and the old house needs the bathroom and laundry done but we're waiting until the weather gets over about 5 degrees first before we do that and get a rental appraisal ... can't rush these things