One of the most common dilemmas my clients face is deciding whether to sell their property before they buy a new home. This happens especially if you’ve lost a home which you fell in love with to a buyer who got their finance in place before the sale of your house was finalised.
It’s a tricky situation to say the least and here are some of the top tips I share with them.
Firstly, I want to explain in a nutshell why an owner can accept multiple offers on their property so that you can avoid the situation of being put onto 72 hour terms. If I take an offer on a house with suspensive conditions (ie subject to the buyer acquiring a bond, selling a home or buying cash) it’s never a guarantee that the funds will be delivered within the allocated time period.
The owner(s) might be tempted to limit further marketing, thinking that the house is sold in essence. But an experienced estate agent will advise them that it’s in their best interest to continue bringing new buyers through hoping to get a second (or even a third) offer on the table.
Most buyers buy in good faith that their bond will be granted (especially if they’ve done a pre-qualification), or that their property will sell quickly, or that their cash will be available in time if it’s invested in a holding account – but anything unplanned can happen and their offer lapses.
This puts a lot of pressure on the estate agent and property owner(s) if marketing was put on hold – especially if there was no back-up offers in place.
Our main priority as estate agents is to keep the best interest of our clients at heart and to make sure that we provide all the options available so you can make an informed decision.
Buying- and selling a property is a stressful process on its own without having to add any extra pressure that could have been prevented or at least minimized.
So here is the advice I share with my clients:
1. Choose a great Estate Agent
Get in touch with a few estate agents who specialize in your area and ask them for a property valuation which is a free service we provide. It’s important to go through the supporting documents thoroughly and not just choose the agent based on the highest marketing price.
2. Do your homework
Determine the average price range in your area and the average time a home takes to sell. A good example is that a home in a lower, more affordable price range tends to sell quicker than a more expensive or exclusive property. My market area is currently overflowing with first-time buyers and clients wanting to scale down. This means lock-up and go townhouses or smaller homes, priced in the early R 2 million’s or lower, sell in a heartbeat.
3. Confirm if your property is in high demand then start house-hunting first
If your house is in high demand then I would suggest that you find your ideal home first and make an offer, subject to the sale of your property. Ask the owners for the special condition of a grace period in which to sell your home if you have a 72-hour clause in your contract – it should state the date after which you can be put onto terms if another offer is final. It is good practice for you to be provided with concrete proof as confirmation that the other buyer’s funding is finalized. In that way the seller can continue with marketing their property while giving you a head start to sell your own house.
4. Get your paperwork ready in advance for a bond application
If you need to apply for a bond for the difference, make sure that all your paperwork is in order – that will ensure that you can submit your application as soon as possible. I always suggest making use of a bond originator to apply on your behalf which saves a lot of time.
5. What if my house is expensive, exclusive or not in high demand?
If your home falls in the category above or your expectation for selling price is a little bit higher than the property valuation then I would suggest that you put your house in the market first. Make sure you work with a dedicated agent who will do their utmost to help you find a house as well as market your property.
6. Be pro-active by looking at homes For Sale online
Create a profile on property websites with the specific details of what you are looking for which will include areas of preference, price range and any specific requirements. Some agencies have buyer’s databases which will notify you of any new homes listed that match your criteria. This process will help you to determine value for money in your scope of properties so that you can act quickly when you view a home that offers the most potential.
7. Some advice for when your house might sell first:
When you’ve received an offer before finding a home I would suggest the following, but please note that it’s not a foolproof solution. The success rate rests with the communication skills of the estate agent and willingness of the buyer(s). It’s best to use an example to illustrate:
I took an offer on a client’s house without her having found a new property yet. I played open cards with the buyers and they agreed to a special condition of the offer being subject to her finding a suitable home in a month from date of signature. They were convinced that it was their ideal home and was willing to take the risk. Two weeks later we found the perfect place for my seller and everything worked out perfectly.
Written by Leandré van Rooyen
Lew Geffen Sotheby’s International Realty