Buying and Selling at the Same Time  –  A Guide for Homeowners

Buying and selling at the same time can be an exciting yet daunting experience for homeowners. Balancing the logistics, your finances, and getting the timing right requires careful planning and informed decision-making. In this guide, we explore key considerations to help you successfully navigate the process of selling your current property while buying a new one at the same time.

What is a simultaneous property transaction?

If you’re trying to buy and sell property at the same time by getting the settlement dates as close together as possible – you’re aiming for a simultaneous settlement. Your goal is to settle on the sale of your current home and purchase your new home on the same day.

But before we go further, let’s be clear about one thing – when it comes to buying and selling at the same time – it’s not easy.

There are many moving parts, and these transactions require careful planning, coordination and professional guidance. In fact, according to realestate.com.au, the reality is that settlement on the same day rarely happens.

You’ll need a team of experienced real estate agents, brokers or bankers and an experienced conveyancer/lawyer who can help you navigate the process effectively while at the same time minimising any potential risks. And, whilst you may not achieve a same-day settlement, you still have options to help you minimise the time between buying and selling or selling and buying.

The benefits of buying and selling a house at the same time

Although buying and selling at the same time carries some risks, there are benefits for homeowners who embark on a simultaneous property transaction. When carried out successfully, this can include:

• Not having to pay rent while waiting to buy your next home
• Not paying a mortgage on two properties at the same time
• Moving out of your old house straight into your new one.
• Reduced moving costs

How does buying and selling at the same time work?

The critical consideration for simultaneous property transactions is whether you buy or sell first. The approach you select depends on various factors, including your current equity position, the type of loan you’re eligible for, and your specific requirements and preferences.

The HomeLoan Experts recommend that you ask yourself the following questions:

• Will it be easy to sell my home quickly?
• How long will it take for me to find a new home?
• Can my family help me out financially, if need be?
• Do I have enough equity to consider a bridging loan?
• Do I have a high enough income to consider owning both at the same time without a bridging loan?

The financial aspects of buying and selling at the same time require careful attention and will ultimately determine your approach.

Start by assessing your current property’s equity and determining your affordability for the new purchase. Don’t forget to factor in additional costs such as transfer duty, legal fees, and moving expenses. We recommend you chat with a financial advisor who can help you evaluate your financial situation and explore potential strategies suitable for your individual needs.

Selling your old home first

This is where you will sell your current home before you buy your new home.

The biggest thing to consider when taking this approach is that you’ll likely need to rent temporarily or couch surf with family and friends until you find a new house. This can be tricky for families who need extra room, so crashing with other people isn’t an option. You’ll likely need to find a rental near your workplace and schools, plus moving twice is also inconvenient and costly. Finally, let’s face it, finding a rental in the current market isn’t always smooth sailing.

In the REINSW Vacancy Rate Survey Results for April 2023, the residential vacancy rate in the Hunter region was only 1.9%. This means that of all the residential rentals available across this region, only 1.9% is not occupied.

Should you still decide to sell your current home first, the major advantage is having the proceeds from your sale readily available in your account to purchase your next home. And who knows, maybe you can negotiate with the new owner to rent back the property until you settle on your new home.

Buying your new home first

Buying a home while still owning your current one isn’t an option for many people. In this approach, you’ll likely pay two mortgages if you settle on the purchase before selling your current home. There’s also a chance that you may not be approved for your new loan because your debt-to-income ratio will be higher with an existing mortgage.

In saying that, buying before selling is an excellent option for higher-income earners with significant equity in their current property. Buying immediately means you’ll avoid moving twice and having to wear the rental costs for temporary accommodation.

Other approaches to consider when buying and selling at the same time

Extended settlement period

An extended settlement period can increase your chances of achieving a simultaneous settlement.

With this approach, both parties must be flexible and open to increasing the settlement period as a condition of sale.

For example, if you sell first, you could include a settlement period of 3-4 months in the sale contract giving you additional time to find and purchase your next home. On the other hand, if you buy first, you will make your offer to the vendor subject to an extended settlement period.

As you can see, both situations require flexibility and finding the party to agree to an extended settlement period may be tricky.

Buy first with a “subject to completion of sale” condition

Another option if you can’t afford to purchase a new home before selling your current one is to make your offer “subject to the completion of sale”. This means that the purchase of your new home is subject to the completion of the sale of your existing home.

Again, this approach can reduce the stress and costs of moving twice because you’ll move straight from your current home into your new one.

The greatest disadvantage is that this offer rarely appeals to vendors, especially when other buyers make offers without conditions. One way you may overcome this is by making a more significant offer. The vendor may be more willing to wait around for your home to sell if it means more cash in their pocket.

Using a bridging loan

A bridging loan is a short-term loan that can help you finance the purchase of your new property while you sell your current one. In this approach, you’ll need funds to ‘bridge’ the gap between receiving the funds from selling your existing home and buying your new one.

With this approach, be aware that you’ll need to pay your existing mortgage AND the repayments on the bridging finance at the same time. Your lender will assess your ability to make these repayments as well as take into account your current home equity, whether the bridging finance will be with or without End Debt, and evidence that your existing home has been sold (i.e. you’ll need to provide a copy of the sale contract.

Get the right help early!

Timing is crucial when undertaking simultaneous property transactions. Work closely with your real estate agent to ensure smooth negotiations and ensure you have plans in place in case of unexpected delays or challenges.

Always (always!) engage a solicitor or conveyancer early – before you list your current home for sale and definitely before you make an offer to purchase the new one. As conveyancers, we ensure that all legal obligations are met and guide you through the intricacies of the selling and buying process. We’re here to protect your interests and help you avoid any legal pitfalls.

Want to know the best bit? We offer a free 15-minute consultation and up to two contract reviews to help answer all your questions and to make sure you’re protected. Call us today on (02) 4056 1070 or get in touch via our contact form.