How to buy a house before selling your current house

Deciding to buy your next home ahead of selling your current property

If you currently own a house or flat and are looking to purchase your next dream property, there’s no law in the UK that says you must sell your existing home first.

You might be aware of the situation in which someone owns a home, finds the next one that they want to live in, and then sells their current house of flat in order to gather the funds needed to pay for the purchase of the new property. But there are many other owners that prefer to first buy their next home and only then start the process of trying to sell their existing property.

There can be a number of reasons that explain why someone might want to take this approach, as Ready Steady Sell says. This can include wanting to keep the existing property as an investment, struggling to find a buyer for the current home, and more.

Whatever the explanation for wanting to purchase your next property before selling the house or flat that you currently own, you will discover that there are pros and cons to this approach. Some of the benefits can include having more time to search for your future dream home, whereas downsides might be increased costs from paying extra stamp duty and other issues.

Keep reading this guide to learn more about the potential advantages and disadvantages associated with buying your next property ahead of selling your current home. You’ll also get detailed information about the various options that you should have available to find a buyer for your existing house or flat once you are finally ready to sell it.

Advantages of buying your next home before selling your current property

Buying and selling homes can often be a stressful experience, and for some homeowners they find there are several ways to lessen this stress through first purchasing their next home:

Having more time to search for your next home

A great benefit of this approach is the fact that you can take your time searching for you next house or flat in order to make sure that you find the property that is perfect for your needs. This isn’t always possible if you sell your current home either before trying to find a new place, or at the same time as starting the buying process for a new property. Without the pressure of having to sell your home quickly, you can relax and conduct a much more careful and detailed search for your next ideal home.

Giving you the ability to sell your existing home at the perfect time

The property market can be volatile and sometimes it seems like houses are selling rapidly at ever-increasing prices, while at others the market seems quiet and prices appear to be dropping. If you hold off selling your house until you have bought a new property, you can try waiting to find the perfect time to buy and sell, giving you complete control over getting the next home you want at a price that’s best for you, as well as selling your existing property when you think the market is just right for it.

Protecting you against the possibility of gazumping

There are many reasons why home sales fall through, including gazumping. This happens when a seller has verbally accepted a purchase offer from a buyer, but then abandons that agreement and sells to another buyer who typically has offered more money, or a quicker sale, or both. By waiting to sell your home, you are more likely to avoid gazumping because the purchase of the new house or flat will not be as contingent on being able to sell your existing property.

Drawbacks of buying a new house before selling an existing home

Although there are several benefits of waiting to sell your home before buying a new property, there can be a handful of drawbacks, which include:

Being liable for additional stamp duty on your second home

Stamp duty is a tax that you must pay the UK government when you buy a second home, under certain conditions. This can be a significant disadvantage to buying your next home before you sell your existing home, because even if you plan to eventually sell the first home, as soon as the second home is bought you now own two properties. And the government will insist that you pay the stamp duty for owning both.

However, if you are in a strong financial position where buying a second home and maintaining a mortgage on your existing home as well is not an issue, you might not consider the stamp duty on the second property to be a major problem. Make sure to do some research online to find out possible exemptions to having to pay stamp duty on a second home.

Problems finding a buyer for your current home after buying a new property

It’s true that buying before selling gives you the perk of not having to settle for a bad purchase offer on your existing home. But the drawback of this approach is that after you have bought your new property, you might need to quickly sell your existing home yet struggle to find a buyer. For example, perhaps you had the funds to cover both mortgages on a very temporary basis, such as one month, and need to quickly sell your current property now the purchase of the new home is complete.

But even if this is your situation, there is a solution: call a fast property buying company. The businesses, also known as quick buyers, make speedy cash offers to buy houses of all shapes and sizes and never charge homeowners any fees to sell. It’s a great way to quickly sell your current home. And you can find a reputable list of quick buyers by contacting The Property Ombudsman, (TPO) an independent entity that sets rules for quick buying member firms. If a quick buyer is a registered member that means they are trustworthy as they must comply with all of the TPO rules.

Choosing your strategy to find a buyer when you’re ready to sell your home

After you have purchased your future dream home and you are finally ready to sell your existing property, there are a few different ways to go about finding a buyer. You can sell to a quick home buyer, sell at an auction, sell with an estate agent or sell without any help from a third party.

There are clear benefits and drawbacks linked to all of these methods, as they vary based on whether they charge commission, how long they take to complete, and other factors. For example, you will not have to pay any fees when selling on your own or to a quick buyer like LDN Properties, but you will pay commission to an auctioneer or an estate agent.

A helpful step can be to write down your top goals with selling your current property, including your ideal sale price, whether you are prepared to pay any fees, and how fast you want to secure a buyer. Then compare these details against the specific facts about the four selling options below and this should highlight the one that is the closest match to your needs.

Selling to a quick home buyer

For a streamlined, hassle-free and no-stress sale, get in touch a quick home buying company like LDN Properties. They have the funds upfront to buy your house or flat right away, as they don’t have to wait for an uncertain number of weeks or months to first get approved for a mortgage that would cover the cost of the purchase. The typical timeline for selling this way is just a few short weeks, and that includes paying you the proceeds and exchanging contracts.

This can also be a good option for those owners who are trying to keep their selling costs low, because honest quick buyers will never charge a seller any commission when purchasing their home. That compares favourably to the commission you would pay when selling via an estate agent or an auctioneer, which would be subtracted immediately from the final sale proceeds.

Quick buyers are also experts at making speedy and fair offers to buy homes regardless of their age, condition, location, shape, size or type. This makes these companies a great choice if you are trying to sell what some other buyers might consider to be a “problem” property because of situations like a legal fight over the home, structural damage, or various other flaws.

LDN Properties, for example, launched more than two decades ago and since then its long list of purchases throughout the UK has included houses with a single skin wall, flats with a freeholder dispute, homes with a heat pump, properties that are located near to power lines, eco houses, flats situated above commercial premises, homes that are close to a junction, properties that do not have a kitchen or a bathroom, houses with a restrictive covenant any many other scenarios.

The process of selling to a quick buyer is very straightforward, and starts with calling the company – within the first hour of talking you should receive a tentative offer on your property. There’s no rush to accept it because you will have at least a week to consider the offer.

If you do accept the initial offer, a representative from the quick buyer will then visit your house or flat in order to inspect it before the company makes a final offer. This is the only such viewing you would need to agree to throughout the entire selling process, compared to potentially dozens of viewings by strangers if you decide to sell through the other three methods.

And the last step, if you accept the final offer, is when the quick buyer works swiftly with your solicitor or other legal representative to complete all of the legal papers and other tasks needed to finalise the sale. From start to finish the entire schedule will be only a handful of weeks.

Selling at an auction

Selling your home at an auction is somewhat of a gamble because you might not receive any bids on the property, which means that it does not sell. You would then need to restart your search for a buyer, potentially adding much more time to your total selling schedule.

Or you could receive just one bid at the reserve price, and this is the lowest price that you agree with the auctioneer at which your property can sell. It’s vital that you take time to calculate a reserve price that should generate a profit from the sale even after you have paid the auctioneer their commission. Failing to take this upfront step risks an outcome where you either sell the home only breakeven compared to what you paid for it, or worse, selling at a loss.

To help with devising the reserve price, consider that many auctioneers set their rate of commission at 2.5 percent of a property’s sale price. This fee will be subtracted from the eventual auction proceeds immediately, which will increase your costs. If you are trying to reduce your selling expenses then you might want to consider other options, for example selling to a quick buyer like LDN Properties that will promise to never charge you any fees.

It’s possible that some auctioneers could be open to either reducing the amount of commission that they will charge you, or having the winning bidder pay a share of your fees, so consider asking about whether either might be viable. But beware that other auctioneers might charge an even higher rate than 2.5 percent, which would further increase your selling expenses.

The reason that auctioneers charge commission is to compensate them for their work in selling your home. This starts with creating a listing that features photographs of the property’s interior and exterior and describes its main features, which they’ll advertise ahead of the auction to get buyers interested. They’ll also host the auction and oversee completion of a successful sale.

But this can be a somewhat slow process, and there’s a lot of waiting involved, including many weeks or months between the day on which you decide to sell this way and the day on which the auction takes place. If your home does sell, the buyer then has about a month to sign all of the required legal documents and finish their other tasks needed to complete the sale.

One way to potentially speed up the process would be to ask the auctioneer if they are open to shortening the deadline for the winning bidder to complete their tasks. Yet they are not obliged to grant this request and some might even give the buyer even more time than a month.

Selling with an estate agent

Estate agents might be a viable option for selling your home if you do not want to be responsible for most of the tasks needed to find a buyer. That’s because, as the website Rello explains, estate agents handle almost every step for selling, from producing and advertising a listing through to scheduling viewings, hearing offers from prospective buyers and ultimately trying to get one to the exchange of contracts.

In exchange for doing all of this work, the typical estate agent will charge commission if they are able to sell your home. This is usually within a range of 1.15 percent to 1.40 percent of a property’s final sale price, and this will be deducted from the sale proceeds immediately, adding to your costs. There are some estate agents that might charge a lower fee than the average range but others could charge even higher, so always check before making a final choice.

This can also be a slow way to sell almost any type of house or flat, and you should not be surprised if it takes many months – or even more than a full year in certain cases – to secure a buyer. If you’re trying to sell as fast as possible, consider other options, such as selling to a quick buyer like LDN Properties, where the process should only take a few short weeks.

There’s another problem with selling via an estate agent in that someone can make an offer but then decide against buying your home and rescind the offer. This will cause the sale to collapse, delaying a sale much further as you will need to begin again with seeking a buyer. And if contracts aren’t exchanged, there is nothing that you can do to penalise the person that did this.

Selling without any help

Finally, you could consider selling on your own, which means that it will be your responsibility to prepare and advertise a listing, organise viewings and hear offers from buyers. This is a large amount of work that can easily cause quite a lot of stress and take up much of your time.

Because of the drawbacks involved, selling without an estate agent or auctioneer is only suggested for those homeowners that have previously sold a property without any assistance before, or people who have a friend or family member with suitable experience selling homes that might be open to helping you out with the selling process at no charge.

It might take over a year to sell your home this way, and even if you get an offer, the buyer can change their mind and cancel it – and there’s nothing you can do to get any penalties from them unless you have already exchanged contracts. This will inevitably delay your selling timeline much further as you will then have to start again with searching for another buyer.

The only clear benefit of selling this way is that you won’t have to pay commission to an estate agent or auctioneer once you sell your home, which reduces your costs. But this saving might be cancelled out but the money you have to spend on advertising your listing and other tasks.