An age-old problem for property sellers is to decide whether to finalise the sale of their current home before buying another, or to go ahead and shop for a replacement first.
“And it’s an important decision to make because the wrong move could have serious financial consequences,” says the Rawson Property Group’s Managing Director, Tony Clarke.
“Most people find it extremely stressful to move house, and would really prefer to know where they are going to live next, when they can take occupation, what size bond they will need and what their new home will cost them each month,” he notes.
They also want, if at all possible to avoid the cost and the major disruption of having to move twice – that is, once to a rented temporary home while they house hunt and then again to their new home.
“In fact, some sellers will actually go to the extent of buying and moving into their new home before they even list their old home for sale, so that this can be properly “staged” for prospective buyers and they don’t have to deal with the stress of viewings while also trying to manage small children and pets.”
Of course, most repeat buyers can’t actually purchase a replacement home without the proceeds of their own sale in hand, but the long-accepted way to get around this has been for buyers to make an offer for the new property ‘subject to’ the sale of their current home within a certain period, says Clarke.
This is a buy-first move that many repeat buyers prefer because it reduces the fear of having nowhere to live after their existing home is sold – and the likelihood of paying too much for a new home that they have bought in a panic, or of choosing the wrong home altogether because they are in a hurry.
However, they do need to know that this strategy is not totally foolproof, because astute sellers will generally only accept a conditional offer to purchase if it also includes what is commonly called an ‘acceleration clause’.
“This provision usually entitles the seller to continue to market his property to see if he cannot perhaps get an unconditional offer – and if he does get such an offer to then give the original buyers only a short period of time (usually a week at most) to revise their offer and make it unconditional too.”
Unfortunately, he says, if these buyers are not able to waive the condition that they need to sell their own house first, the seller will in most cases be entitled to accept the second, unconditional offer and they may well have to re-start their search for a new home.
“But if this does happen, most buyers will at least still have their own familiar home to live in, illustrating once again why it is best to avoid selling until the deal on your replacement home is finalised.”
This article “Buy First And Cut Your Stress Level” was issued by Rawson Property Group – http://www.rawson.co.za/