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Buying or selling a home is not a simple task and plenty can go wrong. Trying to buy and sell property at the same time only adds complexity – but it can be done. Our guide includes everything you need to know about buying and selling simultaneously to give you the best chance of success.
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Anyone who is trying to buy and sell property at the same time by closely aligning the settlement dates is aiming for simultaneous settlement. This means settlement for the sale of your home and the purchase of your new one occurs on the same day.
It’s no easy feat but, if you find an agent to help you achieve this, you can avoid mortgage overlap and will only have to move house once. The downside is that you’ll likely have to sell your home for less and pay more for your new home to incentivise the other parties to be flexible.
Buy or sell a property first
Even though your goal is simultaneous settlement, one usually comes before the other, and the market can guide you on which to do first. Both options have advantages and disadvantages.
In a rising market, it’s clear that house prices will increase in price, so it makes sense to buy first, when prices are low, and sell later, when prices are higher. That way, you save on your purchase and earn more on your sale.
Buying first isn’t right for everyone. See the advantages and disadvantages of buying first below.
Most homeowners who have a current mortgage sell first to avoid the risk of a double mortgage. But there are ways to minimise this, like extended settlements and bridging loans, which we cover below.
In a falling market, house prices are on the way down, so it makes sense to sell first, when prices are high, and buy later, when prices are low. That way, you increase profit on your sale and pay less for your purchase.
Selling first is a popular option for those who can’t afford to pay two mortgages. Here are the advantages and disadvantages.
Regardless of which option you choose, the buying and selling processes may not go smoothly, so it’s best to be prepared. See how below.
Your real estate agent should have experience buying and selling at the same time. He or she could help you juggle decisions to get you as close as possible to settling on both properties simultaneously. For example, your agent could:
One way to buy and sell property at the same time is to extend the settlement period by 3 to 6 months, but this only works if the other party agrees.
If you sell first, your contract of sale will include an extended settlement as a condition of sale. If your buyer can wait, this will give you time to find and purchase a home before settling.
If you buy first, you will need to ask the seller to include an extended settlement as a condition of sale in the contract. If the seller is not in a rush to sell, this will give you time to find a buyer for your property.
A good agent can help you negotiate an extended settlement with either party or suggest an incentive to offer if it’s proving difficult.
It’s possible to buy first without the risk of two mortgages by adding the sale of your current home as a condition of sale in your purchasing contract. This allows you to sell your home before settling on your new home, avoiding the need to rent anywhere in between.
It sounds great, but you’ll need a good agent to help you negotiate this successfully because:
You might need to offer more money to make your offer more competitive. You could also include unconditional and settlement deadlines into the contract. This allows either party to end the contract if the deadlines aren’t met.
A bridging loan helps you cover your second mortgage until you sell your original property. These loans:
You usually need a lot of equity in your current property before a bank will consider offering you a bridging loan.
Banks vary in how they structure bridging loans:
For more on bridging loans, check out our guide on How Bridging Loans Work.
Rent-back agreement
If a bridging loan won’t work for you and the buyer isn’t flexible on the settlement date, you could enter into a rent-back agreement with your buyer and their lender instead.
This gives you time to search for a new home, while staying on as a tenant in your current home after settlement.
A rent-back agreement:
An entry condition report is vital in a rent-back agreement. It’s a record of the state of the property at the beginning of the tenancy. The new owner should complete one and give it to you to check, amend and sign so you’re both on the same page.
A rent-back agreement offers both advantages and disadvantages:
Anyone can buy and sell property at the same time, but being prepared is the best way to ensure you’ll succeed. Here are some common mistakes sellers make when trying to both buy and sell. Avoid these and you’ll be ahead of the game.
When delays happen, selling or buying a home can be stressful. When trying to do both at the same time, twice as many things can go wrong and each problem can affect both deals.
With the added risk of homelessness, it pays to have a Plan B. This could mean:
Keep in mind, your buyer might also need to buy and sell at the same time, which requires agents to settle three properties simultaneously.
You may not qualify for as large a loan as you think, so it pays to get pre-approval. Otherwise, you may find yourself scrambling to find a home in your price range once you sell.
If you spend your time looking at expensive properties and find the perfect one, you may suddenly find out that the bank won’t loan you enough to buy it. After all the careful planning you’ve done to buy and sell at the same time, this could throw off everything as you start the property search again.
If you’re relying on the money from the sale of your house for a deposit on your new home, overestimating it’s value can be a disaster. Check out this case study to see why.
Julie believes her house is worth $700,000. She has set her purchasing budget at $1.7 million. With her current income, she needs $700,000 from the sale of her property as a deposit or the bank will not approve her new mortgage. Julie finds the perfect house at $1.75 million but her house sold for $630,000 – the actual value in the current market. Not only is her new house over budget, she also doesn’t have enough to pay the deposit for a house worth $1.7 million.
Julie believes her house is worth $700,000. She has set her purchasing budget at $1.7 million. With her current income, she needs $700,000 from the sale of her property as a deposit or the bank will not approve her new mortgage.
Julie finds the perfect house at $1.75 million but her house sold for $630,000 – the actual value in the current market. Not only is her new house over budget, she also doesn’t have enough to pay the deposit for a house worth $1.7 million.
Check out our Property Value Guide to find out how to accurately value your property and avoid issues that come with overestimation.
Buying and selling at the same time is complex enough without adding another agent to the mix. For the best chance of buying and selling simultaneously, keep it simple and choose one quality agent to handle both.
The only time you should consider using two different agents is when you’re buying interstate.
You can boost your chances of settling both properties at the same time if you avoid settling on a Friday or late in the afternoon. Most sellers prefer to finalise the sale of their home first and rely on the funds being transferred into their accounts before settling on their new property. Choosing a Monday to Thursday morning gives you the best chance of seeing the money in your account quickly.
Your best chance of success is with the help of a good agent. Compare your local agents now and ask how they can help you buy and sell at the same time.
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