When settlement dates don't match???

Hi Guys,

We bought our first house some time ago but are now looking to upgrade. Having never sold and bought at the same time we have no idea of the processes involved. We have found some answers for some questions but are stumped on a question when settlement dates can't be matched.

We are thinking of selling first and then buying. Ideally we would obviously love to match the settlement dates but what happens when this just cant happen? I'm assuming there are instances when people are "homeless" for a short time. When renting requires a 6-month lease how do you overcome this "homeless" situation?

Thanks in advance,
Andrew
 
Hi Barnesy,

There are a few options:
1. Make it a condition of sale that the vendor (you) wants to rent the property back off the new purchaser for a period of up to 6 months. You can do 3 month leases that run month-to-month after that.
2. Rent some other place for 3 months only. These properties are usually "for sale" so you caould experience some disruption during Opens etc.
3. Move in with family for a short time.
4. Put your stuff into storage and rent a furnished apartment.
5. Force the settlement dates to match by having a delayed settlement on the PPOR you are selling and a quick settlement on the place you are buying.
6. Delay the settlement on the place you are selling (without a clause in the contract of sale to allow this). Delaying settlement usually carries high interest penalties for the purchaser but there are no such penalties (usually) for the vendor.

Theses are just a few that come to mind quickly. There would be others I'm sure. ;)
 
Yes LOL, that was the most obvious one I missed......especially given that I am always preaching 'buy and never sell' :p

LOL. Ideal world would allow me to do this. Real world dictates otherwise. Thanks for the other tips. I guess the most favourable is to force the settlements to match. How hard is this to do normally?
 
I see you are relatively new here, having only two posts.

You might want to explain why you think you cant keep the old house, there may be ways you can keep it.

My understanding is that depending on your circumstances, there may be ways you can manage to keep the old house.
 
I see you are relatively new here, having only two posts.

You might want to explain why you think you cant keep the old house, there may be ways you can keep it.

My understanding is that depending on your circumstances, there may be ways you can manage to keep the old house.

Yes - very new. I don't see myself as being financially fit to have an IP as yet. I have a young family and have a public service job (teaching) so may, in fact, do well do be able to service one mortage ;) .

I have only ever bought the one house before and so have never gone through a combination sell/buy process. For the inexperienced, this poses many stressful questions that may only be answered as I go through the process.
 
Barnesy, whilst it's possible to get concurrent settlements, in my experience, the odds that something will go wrong with one of the two transactions are "pretty reasonable". So I'd go for a concurrent settlement, including a provision in each contract whereby if one settlement is delayed, the other can be postponed, too.

Even with that clause, I've had it happen (to me!) where the first settlement (purchase of new home) happened at 2pm, and the sale of our old home was scheduled for 3pm but there was a problem with cheques, and the second one ended up slipping to the next day. Because the purchase went through on-time, moving wasn't a hassle. We only found out that our sale hadn't happened on time when we got a "polite, just slightly concerned" call from the lender the next day, saying that we appeared to have $600K owing on our $400K mortgage (or something like that), due to the absence of $200K proceeds' from the sale. :D

And ask your solicitors' advice; they've done this many more times than I have, I'm sure, and have seen all the ways it can go wrong, and thus are better prepared to protect you from all eventualities. ;)
 
Yes - very new. I don't see myself as being financially fit to have an IP as yet. I have a young family and have a public service job (teaching) so may, in fact, do well do be able to service one mortage ;) .

Please don't think that I am having a go at you, because I am not.

You may be extremely surprised to learn, depending on the repayments of the old home, and the expected rental return, that you can, in fact, keep both of them.

When we purchased our first IP, it was only because I wanted to find a way to reduce the interest payable on our current mortgage, and spoke to several different companies about such, than one of them explained to me how easy it was to purchase a second home. I was obviously a good student, as I listened, did some research, and bought our first rental property. At the time we had two children who were around 7 & 5 years old and had a combined income of less than $25k.

Over the years we have bought (and sold) many more, but it was really only that chance meeting that opened our eyes to this elusive world of property investing.
 
Please don't think that I am having a go at you, because I am not.

You may be extremely surprised to learn, depending on the repayments of the old home, and the expected rental return, that you can, in fact, keep both of them.

Thanks Skater. No offense taken. I understand that there probably is a way to keep both houses but it would be difficult and require sacrifices I'm not willing to take at the moment. I understand this forum is mainly for the benefit of property investors and I really do appreciate any advice I get here even though I don't fit the profile just yet.
 
it would be difficult and require sacrifices I'm not willing to take at the moment.

Again, I'm not picking on you, but do you know how much rent you would receive from your existing home? If you have paid down a fair percentage, you might find that the repayments are lower than the rental payments, meaning no sacrifices at all.

I'm not saying you would be a fool to not keep both, but I suggest you look into it. It might work for you, it might not, but you don't know for sure until you look into it. You have nothing to lose.
 
I'm not saying you would be a fool to not keep both, but I suggest you look into it. It might work for you, it might not, but you don't know for sure until you look into it. You have nothing to lose.

I wish we'd had someone to talk (and walk) us through this sort of information before we sold our first house... and our second:rolleyes:

At the time, we owed $190,000 on our first place, sold it for $340,000 (and it sold again 18 months ago, untouched since, for $640,000). The mortgage, from memory, was about $600 a fortnight - although that's a guestimate. It was 3 bedrooms and we would have rented it for about $350 a week. Bingo, instant mortgage covered. Although I know we would have had to have dug in a bit for a few of the others costs but, gee, not for long. Regrets? Yep, I have a few.:cool:
 
Regrets? Yep, I have a few.:cool:

That's the thing. We would never have ventured into IPs without that chance meeting. So glad we did.

A lot of people sell just because they don't know there is an alternative. Investing is not for everyone, but you don't know unless someone opens your eyes.
 
That's the thing. We would never have ventured into IPs without that chance meeting. So glad we did.

A lot of people sell just because they don't know there is an alternative. Investing is not for everyone, but you don't know unless someone opens your eyes.

Thanks again. We have definately given it some thought but the reality is that I don't have the borrowing power to have a mortgage close to the million dollar mark it would take to keep this house and buy the house we want to raise our children in.

All I need to find now is a good solicitor/conveyancor in the Liverpool region. :confused:
 
$1M does sound like quite a lot if you are unable to set aside some cash reserves to cover when rental income is temporarily unavailable due to being in between tenants.

No-one here can give you good advise when they dont really know your circumstances, however I suspect it happens more often than not that people sell because they don't know enough to understand they can do otherwise.

Personally I was quite shocked to discover that if we move out of our apartment, and rent it out, we would make an income off it.
 
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