Sell then buy, or buy then sell?

Are you looking at new properties for sale on Trade Me every day?  What if you see the perfect home for you… but you need to sell your own home first?

That begs the question;

Are you better to sell your existing home first?  Or are you better to wait until you find a home you like before selling your existing one?

Everyone’s circumstances are different and I believe there is no right or wrong answer.  If you decide to hold on to your existing property until you find a new one that you like, there are a few things that you need to consider beforehand.

1. Will the sale price of your home affect what you can afford for your new home?

Will you be working out the budget for your new home based on the lowest price you think you will get for your property?

If you decide to sell first then you will know exactly how much you can afford on a new home.

2. Do you know what an escape clause is and how this could potentially effect you?  

If your offer is accepted, the vendor normally would have an escape clause written into the contract.

The standard REINZ escape clause is:

“If before this agreement becomes unconditional the vendor receives an acceptable offer from a third party to purchase the property, then the vendor may serve on the purchaser a notice requiring the purchaser to advise within five working days after service of the notice whether all conditions for the benefit of the purchaser have been satisfied or waived and whether the requisition procedure in clause 5.0 of the General Terms of Sale has been completed to the purchaser’s satisfaction. If the purchaser does not notify the vendor within the period set out above that the above matters have all been satisfied, then this agreement will immediately terminate.”

This means that the property is still on the market.  If the property receives another offer on the property that the vendor accepts, it becomes the back up offer.  As soon as that offer becomes unconditional the vendors may serve notice on you giving you five working days (in this case) to satisfy all the conditions in your contract.

So basically you would have five working days to receive and accept an unconditional contract on your existing home.

3. “Subject to the sale of a property” is seen as one of the least strongest offers to a vendor when trying purchasing a property. 

“Subject to the sale of a property” is seen as one of the least strongest offers to a vendor when trying to purchase a property.

If there is more than one offer on a property at one time it is called a “Multi-Offer”.  The offers are presented to the vendor at one time and they can decide on which offer they want to work with.

Price alone does not come into the equation and vendors will also look at what the conditions involved.

The common time period for this type of offer is generally six weeks, which seems like a long time to have to wait for their property to go unconditional – and that’s if your property sells!

Of course if you are putting in an offer on a property, whether you have sold or not, I recommend you seek legal advice from your solicitor.

If you have any questions, comments or suggestions on this please feel free to comment below or you can contact me directly at anytime.

Anita Dobson

– Please note that information in this post is not necessarily the views of Harcourts Tandem Realty Ltd or Anita Dobson.  I recommend you seek professional advice before entering into any agreement.