Anyone who’s ever bought or sold a property knows it takes time – at the moment correctly priced properties in South Africa spend an average of 3 to 5 months on the market (according to a recent Lightstone Property Residential Mortgage Market Overview), and once sold it takes about another three months for the transfer to go through.
So, should a seller sell their property before buying another, or buy the next one first, before selling the current one? It’s the eternal question - both options have their own advantages and risks, but all things considered I’d generally advise selling before purchasing another home.
The risks of selling before you buy
I believe that the risks of selling before buying another property are more manageable while the advantages are more beneficial; “Essentially there are two risks when selling your property first: you might find that you’re not able to find and buy the right property as quickly as you’d hoped and while you wait you may need to rent (which is an added cost). Secondly you might find that prices have gone up in the interim and that you’re now not able to buy into a higher or even similar price bracket as before.
These risks can be avoided by carefully managing the sale of a current property – it’s possible to extend the settlement date of a property in order to have enough of a time buffer to select and purchase a new property.
The advantages of selling first
Here are a number of reasons why it’s in a seller’s best interest to sell, and then to buy which include:
While no strategy is fool proof there are a number of things sellers can do to ensure that they don’t end up having to rent while the transfer of the new property goes through, or lose out as the property prices start going up and they can’t afford a similar property anymore. The most important moves are to: