Main image upload

Should we sell our house before we buy a new one?

November 2016

Question

We are attempting to move house and have been in a bit of a quandary for the last while. We are retired and have decided to move into a house in the local town to be nearer our daughter. We know our own house is worth much more than the house we are trying to buy so we will have cash but the auctioneer selling the house in the town says we have to have our house sold before we can bid on the new house. My husband says he doesn’t want to put our house on the market until we secure a new place, and a local auctioneer has said ours could take a couple of months to sell. I’ve been to the bank and they won’t give us bridging finance.

Answer

Deciding to move house is a big decision at whatever stage of life. Your wish to downsize to a more convenient town centre location closer to your daughter is understandable. However, if, as it sounds, you first need to sell your house in order to acquire the smaller property in town, it is likely to have serious consequences in terms of your ability to make a meaningful offer. Often the time period to dispose of a property can be unknown and it is also understandable that the auctioneer does not to want accept bids from you for the town house until they know you have sufficient funds to progress with the sale in the event that your offer is accepted. Otherwise their client could be involved in an open-ended process over which they have little influence.

Most banks are unwilling to offer bridging finance to older borrowers and therefore unless you have access to a large sum of cash or other funds, you will likely have to sell your own property in order to purchase the other one. This is the reality of buying and selling property.

I always advise clients to focus first on the sale of their own property and once this is completed, they can go into the market with certainty. Moreover, armed with cash, you may be able to secure a better price by offering a full cash offer and the ability to close on a sale quickly. Alternatively there may be merit in renting for a period of time before taking the decision to purchase. This allows you the opportunity to move to a new location and experience living in a new area without having made a big financial commitment. Leases will typically be six months which would be sufficient time for you to make absolutely sure the location is right for you.

One suspects that there will be other town centre properties coming to the market in the event that the one which you are interested in is sold while you are trying to sell your own. If however, you are really only interested in this particular house and none other, you could try making the agent an offer: for example you could offer a non-refundable deposit and ask for a delayed completion date.

This is a risky strategy and one which should only be entered into if you are very confident of selling your own house within a reasonable time frame. Do bear in mind the time of year when your property might be brought to the market as there may be a seasonal lull in the local market during winter. In addition, once terms have been agreed it will typically take 8-12 weeks to complete contracts. This must all be factored in to your expected completion.

Gerard O’Toole is a chartered residential agency surveyor and member of the Society of Chartered Surveyors Ireland, scsi.ie