Timing the sale and the purchase

Navigating the complexities of buying and selling simultaneously in Victoria.

Selling first or buying first?

One of the most difficult decisions for Victorian downsizers is whether to sell their current home before buying a new one, or vice versa. Selling first provides financial certainty, as you know exactly how much money you have to spend on your next property. This eliminates the risk of being forced to accept a lower price for your family home or being unable to settle on your new purchase. However, it may require you to move into temporary accommodation or negotiate a long settlement period to give you enough time to find your next home, which can be stressful and expensive.

Buying first allows you to secure the perfect property when it becomes available, ensuring you do not miss out on a rare opportunity. However, it introduces significant financial risk. If your family home does not sell as quickly or for as much as you expected, you may find yourself needing bridging finance. Bridging loans in Victoria can be expensive, with higher interest rates and a requirement to clear the debt within a set timeframe. This approach is only recommended if you have a significant financial buffer and a very realistic understanding of the current market value of your home.

Negotiating flexible settlement terms

To bridge the gap between selling and buying, you can attempt to negotiate flexible settlement terms. A standard settlement in Victoria is 60 to 90 days, but you can request a longer period, such as 120 or 150 days, when selling your home. This gives you more time to shop for your new property without the pressure of an immediate move. Conversely, when buying, you can ask for a shorter or longer settlement to align with your sale date. Success depends on the needs of the other party, but it is always worth asking your conveyancer to include these terms in negotiations.

• Selling first for financial certainty
• Buying first to secure the right property
• Using bridging finance as a temporary solution
• Negotiating long settlements (e.g., 120 days)
• Licence agreements to move in early or stay longer

Understanding bridging finance

Bridging finance is a short term loan that covers the purchase price of your new home while you wait for your current home to sell. While it can be a useful tool, it is not without risks. Interest usually capitalises on the loan, meaning your debt grows every month the property remains unsold. Most Victorian lenders will require a valuation of both properties and will only lend up to a certain percentage of the combined value. You should consult with a mortgage broker to understand the total costs and have a clear exit strategy in case your property takes longer to sell than anticipated.

Market conditions should also influence your timing strategy. In a 'seller's market' where properties sell quickly, buying first might be less risky because you can be reasonably confident of a fast sale. In a 'buyer's market' where properties take longer to sell, selling first is generally the safer option. Keep a close eye on auction clearance rates and average days on market in your specific Victorian suburb. This data, available from sources like the Real Estate Institute of Victoria, can provide a good indication of how long you might need to prepare for a successful transition.

Finally, always have a plan B. If you sell your home and cannot find a new one in time, research local short term rentals or talk to family about staying with them. If you buy first and your home does not sell, know at what price you are willing to drastically discount to ensure a sale. Having these contingencies in place reduces the emotional stress of the transition. Your conveyancer and real estate agent can provide valuable advice on current market norms and help you structure your contracts to provide as much protection and flexibility as possible during this critical phase.