Selling while buying

Decide whether to sell your current home first or buy your new property first.

The benefits of selling your home first

Selling your current home before buying the next is often considered the safer financial path. This strategy provides you with a precise budget for your next purchase, as you know exactly how much cash you will have after the sale. It eliminates the pressure of having to sell by a certain date to meet a purchase deadline. In Victoria, where many properties are sold via auction, being a cash-ready buyer puts you in a strong position. You can bid with confidence, knowing your financing is secure. However, the risk is that property prices might rise while you are between homes, or you may need to find temporary rental accommodation if you do not find a new home quickly.

When you sell first, you also gain the flexibility to wait for a high offer rather than accepting a lower price out of desperation. This can be particularly beneficial if your current home is in a niche market or requires a specific type of buyer. The downside is the logistical challenge of moving twice if the dates do not align. You will need to factor in the costs of short term rentals and professional storage for your furniture. For many families, this temporary disruption is a small price to pay for the financial security of knowing their exact position. It allows for a more relaxed search for the perfect long term family home without the ticking clock of a bridging loan.

The risks and rewards of buying first

Buying your next home before selling your current one allows you to move directly from one property to the other. This avoids the need for temporary housing and double moving costs. This strategy is attractive when you find a unique property that you do not want to miss. However, it carries significant financial risk. If your current home does not sell as quickly or for as much as expected, you may be forced to manage two mortgages simultaneously. In Victoria, lenders will often require a bridging loan to cover this period, which usually involves higher interest rates and strict repayment terms. You must have a clear exit strategy if your home remains unsold for several months.

• Assess current market speed in your area
• Consult your bank about bridging loan eligibility
• Identify temporary rental options in your target suburb
• Review the cost of professional storage facilities
• Determine your minimum acceptable sale price

Using subject to sale clauses

A middle ground exists by including a 'subject to the sale of the buyer's property' clause in your purchase contract. This allows you to commit to a new home while protecting yourself if your current home does not sell. In Victoria, sellers are often hesitant to accept these offers, especially in a competitive market or at an auction. If they do accept, they may include a 'sunset clause' or a '48-hour clause' which allows them to continue marketing the property and potentially accept a better, unconditional offer. If this happens, you would be required to either go unconditional or withdraw from the contract. It is a complex legal area that requires advice from a qualified Victorian conveyancer.

Another option is to negotiate a long settlement on the home you are buying. This gives you more time to sell your current property and align the dates. In Victoria, a standard settlement is 60 to 90 days, but you can request 120 days or more. Some sellers may be willing to accommodate this if they are also looking for a home or if you offer a slightly higher price. Conversely, you could offer a long settlement to the person buying your current home. Communication between all parties is essential. Your agent and solicitor will play key roles in coordinating these timelines to minimize the period you are without a home or paying for two.

Ultimately, the choice depends on your risk tolerance and the liquidity of your current asset. Properties in high-demand areas with consistent sales volumes are safer to buy against than unique or remote properties. Conduct a thorough stress test of your finances. Ask yourself if you could survive for six months if your home did not sell and you had to pay two mortgages. If the answer is no, selling first or using a robust subject to sale clause is likely the better path. Your peace of mind during the transition is just as important as the final sale price of your home.