My husband and I are looking to move home this year as we have outgrown the property we are in.
We started looking last year and even made an offer, but we lost out because our own property wasn’t yet on the market.
We learnt our lesson and put our home up for sale. Having accepted an offer on our current flat, we eventually found our dream new home.
Unfortunately our buyer subsequently pulled out, and we were once again left feeling deflated as the home we had our hearts set on was then sold to someone else.
We don’t want to continue with this endless cycle of disappointment, and would like some advice on what to do.
Is it worth selling up first and renting somewhere temporarily, so we are more attractive as buyers? Are there any potential pitfalls when doing so? (Via email)
In many areas, the number of properties for sale simply isn’t keeping up with the number of would-be buyers, meaning many lose out and are left feeling disappointed.
Ed Magnus of This is Money: Moving home is a stressful business at the best of times. It almost always requires upheaval, time-sapping admin and a degree of uncertainty.
When searching for your perfect property, it can feel like your life is being put on hold, with future plans thrown into disarray as you don’t know where you will be living a few months down the line.
What’s more, the whole process of moving home can take a considerable amount of time, which often takes those who haven’t moved for some time by surprise.
The average time it takes to sell a property from the first day of marketing to legal completion is currently 166 days, according to Rightmove – that’s almost 24 weeks.
It typically takes 39 days for a property to go from being ‘for sale’ to finding a buyer, and then a further 127 days on average to go through the surveying, mortgage approval and legal processes and complete.
That might be enough in itself to put some people off moving home. Add that to a potentially long property chain of equally anxious buyers and sellers, and there is also a good chance of deals collapsing, just like our reader has experienced.
Many property transactions are dependent on a chain of buyers and sellers, all relying on each other to ensure they can complete on their own purchase.
If any transaction in the chain is delayed or collapses, everyone in the chain is impacted.
According to Rightmove 27 per cent of property transactions fell through last month.
Should our reader sell before they buy?
Even if your property is for sale, sellers and their estate agents are unlikely to take your offer seriously if you don’t have a buyer for it.
Accepting an offer on your own property first will put you in a much stronger position.
However, if you want to go one step further, you might prefer to sell up before making an offer on a new home.
This will probably make you a more attractive buyer in the eyes of a seller as you will be chain-free, and this could also put you in a stronger bargaining position.
The seller will deem you to be a less risky buyer than someone reliant on selling their own property, and that may well be worth something.
According to Rightmove 27 per cent of properties transactions fell through last month.
But there is an obvious drawback, in that selling before you have made an offer will require you to find a stop-gap home, perhaps staying with friends or relatives who are willing to help out.
If that is not possible, you will have to find somewhere to rent for between three to 12 months.
It is a good idea in theory, but many find the cost and inconvenience is too much to bear.
There is also your mortgage to consider. If you are hoping to move or ‘port’ your existing mortgage to your new home, renting temporarily may not be the best tactic.
Most lenders only allow for a two-to-three-month period between selling and buying a property, in which you can bring your mortgage ‘back to life’ without incurring an early repayment charge.
Most fixed-rate deals come with early repayment charges, which often range between one and five per cent of the outstanding mortgage amount.
Finally you also have to accept the risk of the market moving against you in between your sale and your purchase.
After a year in which property prices rose by 10 per cent or around £25,000 according to some indexes, even a six month delay could prove costly.
If house prices went up in that time, the money you had from the sale of your home might get you less when you came to make your onward purchase.
There is also a chance that property prices could fall, meaning the delay could pay off, but a dramatic drop is unlikely.
We asked Jonathan Hopper, chief executive of the buying agency Garrington Property Finders, and Lucy Pendleton, property expert at estate agent James Pendleton, for their advice.
While Hopper said selling up would likely be worth it, Pendleton was less encouraging. We have outlined both their views below.
‘It’s a booming market – they should sell up’
Jonathan Hopper replies: Buying a home in a booming property market invariably brings with it a mixture of hope, hard work and heartbreak.
For every successful buyer, there may be several who miss out. If this is you, and you keep losing out to other buyers, it’s worth stepping back and taking steps to improve your chances.
The secret here is to make yourself as ‘proceedable’ as possible. This is estate agent code for making yourself a more attractive buyer.
The secret here is to make yourself as ‘proceedable’ as possible. This is estate agent code for making yourself a more attractive buyer
Jonathan Hopper, buying agent
Sellers, and the estate agents who work for them, grade buyers according to how proceedable they are.
They will look at how far advanced your own sale is, as well as the size of your offer.
If you’re buying with a mortgage, you need to have a loan approved in principle as an absolute minimum.
Showing that you’re ready to move quickly – for example by appointing a conveyancing solicitor – also helps.
But you can jump to the top of the proceedability pack by selling your own property in advance.
This will make you ‘chain free’, making your offer much more likely to win out over those of other buyers who need to sell their home before they can move.
House prices increased by over £24,500 in 2021, the largest annual rise since March 2003
To decide whether it’s right for you, you need to weigh up your individual circumstances carefully and seek expert advice.
If you’re moving from a less sought-after area to a very popular one, your home could take longer to sell than the homes you’re interested in buying.
In this case, it may make sense to get your ducks in a row early, selling before you start offering in earnest.
Also, in the current market, houses are generally being snapped up faster than flats.
So, if you’re moving from a flat to a house, you may want to get your flat sold now so you’re primed and ready to strike when you see a house you really want.
Conversely if you were downsizing from a house to a flat, the hassle of moving twice might outweigh the benefits.
Another factor to consider is the cost involved. Depending on what sort of rental property you choose, renting for six months may cost more than six months of your current mortgage payments.
But spending more now to give yourself an edge over other buyers could save you money in the long run.
With the average home rising in value by over £2,000 a month in 2021, according to the Halifax, taking the plunge and moving into rented accommodation could pay off.
It might help you buy somewhere more quickly and spares you from more frustrating months of property snakes and ladders – although there are no guarantees.
When prices are rising so fast, allowing your purchase to drag on unnecessarily will cost you money. And in such a competitive market, it’s worth thinking outside the box to give yourself a competitive advantage.
Being bold and selling now might cost you several months of rent. But it could save you much more money on your purchase, not to mention the heartache of losing out again and again to more committed buyers.
‘It might not pay off – sit tight’
Lucy Pendleton replies: It’s too late in your case, but when a buyer pulls out, a good agent can often convince a vendor to delay remarketing their property for a few weeks to give their buyer the chance to find a new one.
That comes down to the skill of the agent, who must be able to demonstrate to the other side that you easily attracted a buyer before and can do so quickly again.
My advice is that you sit tight and wait for the volume of properties coming to market to improve later this year. It’s less risky and you will hopefully be presented with more choice and less competition.
There are times when stepping off the housing ladder and breaking a chain is recommended, but personally I don’t think this is one of them
Lucy Pendleton, estate agent
There are times when stepping off the housing ladder and breaking a chain is recommended, but personally I don’t think this is one of them.
The market can move on quickly without you, and you can suddenly find your budget shrinking as prices rise.
That may be less of a risk this year after valuations rose so strongly in 2021, but it’s still a possibility.
You’ve also got the rental market to worry about. This has been running exceptionally hot as well and should give anyone contemplating an early sale pause for thought.
The lettings market is fiercely competitive and that means that, not only are rents relatively expensive due to high demand, but landlords are also reluctant to take on shorter tenancies of the kind you’d be looking for.
Landlords prefer contracts of at least 12 months, so if someone comes along offering to sign up for longer than you’re willing to, you will lose out on that temporary home just as easily as you did in the sales market.
That would clearly be incredibly frustrating.
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