Buy or Sell First? What Homeowners Need To Know

Matthew Scafidi
September 22, 2017

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Moving around on Melbourne’s property ladder is often a question of timing.

Whether you’re looking to downsize, move up into a more desirable home or simply find a place that better suits your needs, one of the biggest questions to answer is: Do you buy then sell? Or sell then buy?

Here are the key pros and cons of each strategy.

Buying first to beat a rising market

Buying first can be a sensible strategy in a competitive market, especially if you’re confident your current property will also attract plenty of attention. In areas where house values are on a strong upward trajectory, which includes many of the suburbs across Melbourne’s east and south-east, it makes sense to buy before the market rises further, then wait for your current home to increase in value before you sell. 

3 reasons to buy first

  • You own property in a steadily rising market.
  • You’re planning to buy in a neighbourhood with comparable prices.
  • You’re keen to break into a market where prices are projected to keep rising.

Risk factors: Don’t buy first if you’re not confident about the value of your current home, or if you’re working within tight budget constraints.

Selling first to set your budget 

If you don’t have a great deal of budget flexibility, following the traditional advice to sell first is likely to be your best bet. Once the auction is over you’ll know exactly how much money you have to work with to find a place that suits your needs.  

3 reasons to sell first

  • Knowing your budget is your highest priority – you don’t want to end up borrowing more to buy your next home.
  • You own property in a market where prices are steady or even declining.
  • You’re happy to rent while your take time finding your next property.

Risk factors: Don’t sell first if you’re relying on prices falling to get into your target areas as you could find yourself locked out of the market.

Downsizing vs upsizing

Downsizers often have the most flexibility when it comes to timing their sale as they may be moving out of a larger home in an established neighbourhood into a much smaller place, sometimes even finding they end up with money left over.

If upsizing in on the cards or you’re looking to move into a more sought-after market, make sure you factor in all the extra costs that come with making a move such as stamp duty, conveyancing, legal and moving fees before you make a call on timing.

Making the right call for your situation

The key to making the right call for your particular situation comes down to knowing your own market as well as the markets you have on your wish list. Take the time to look at recent sales figures to see whether prices are moving up or down and understand the long-term trends. This is where engaging a real estate expert in your area will give you the edge.

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