Planning For The Move: How To Manage Selling And Buying

Moving house is a process most of us go through many times in our lives. It can happen because you or your partner get a job in a different city, you decide you want more space to raise a family, or you find your family has grown up and you no longer need the extra space and would like to downsize.

Whatever your reasons for moving may be, most people would agree that it can prove to be a very stressful period, and requires you to make some huge decisions. Getting these wrong could have severe financial impacts, while getting them right, and potentially making some money along the way can be extremely rewarding.

Very few of us can afford to start shopping for their next house without selling the one we’re in first – and the market in most places is continually changing – affected by the economy, politics, growth in the area, time of year and of course, the supply of houses around us.

Selling Your Home

The first thing prudent homeowners should do is get an up-to-date market appraisal on their property’s value, which will allow them to plan knowing what they can expect to get for their home. With this in mind, they can weigh up their finances, speak to a broker and work out their budget for the next house.

This may sound obvious to most but a large percentage of people get themselves in trouble because they’re too optimistic in the value of their property and get emotionally attached or, in some cases, commit to their next property when they are not in a position to do so – which can cause severe stress and financial repercussions.

For instance, assuming you can get $600,000 for your home because 2 years ago you had it appraised at that amount, only to find out once you’re on the market that you are just going to get around $550,000 can leave you significantly short when buying your next home if you have made commitments with the $600,000 in mind.

A particularly relevant issue at play in the market right now is the Australian banking commission which is currently underway – the banks have responded to the commission by tightening up on loan approvals, to the point where in a lot of cases they will only grant loans to those with a demonstrated saving ability.

This is a far cry from the way they used to do things and is taking a toll on the property market, fewer loan approvals mean a lot fewer buyers – which is leading to a saturated housing market in many parts of Australia. A decrease in demand is leading to an increase in supply which is bringing down the value of many homes as people need to compete more than ever to sell their homes.

In a competitive market place, the small improvements made to the home you’re selling can be worth the extra effort. Stand out by having the house tidy, de-cluttered and feeling fresh. Neaten up the garden and pressure-clean the driveway to increase street appeal. Ensure any small maintenance issues are taken care of, rather than having the attitude of “whoever buys it can fix it up,” as this school of thought will see you lag behind more willing sellers.

The silver lining in a suppressed property market and an important point to understand for any seller is that everything is relative. In the same way, you are not able to get $600,000 for your home, the dream house you have spotted in the suburb you need to move to, to be closer to the kid’s high school, and your job is not worth what it may have been two years ago.

You can nullify your concerns by knowing that the $50,000 you weren’t able to get for your home can be made back on the next house, as they will have to entertain far lower offers too.

With this in mind, listen to the advice your realtor gives you and do not over-price your property. If your property is not getting regular viewings and the home opens are not bringing in many people – chances are your property is over-priced for the market.

The only real exception to this is if you have a property which appeals to a tiny percent of buyers, such as a lifestyle property in a remote area or an extremely luxurious home outside of most Australians price class.

Ideally, you want to receive an offer as soon as possible, this is not always realistic in a suppressed market, but the fewer days on the market your property has the more chance you have of a higher offer. The best negotiation tool your realtor has at their disposal is being able to prove or convince buyers that there are other interested parties, thereby making the buyer put in their best offer or risk losing out. Once buyers believe they are the only interested parties they will often come in lower, or begin to question whether the house is for them as nobody else seems to be showing interest.

Buying Your New Home

Once you have sold, it is time to go out into the market and purchase your new home. Engage the realtor who handled the sale of your home if you have built up a good working relationship – they will be able to help you identify the right property, and should be able to provide some insight on whether it is good value.

As a cash buyer (meaning you’ve sold and have the money and your offer is not subject to any financial conditions) you are the ideal buyer and will have more negotiation room than somebody that is “subject to sale,” or “subject to finance.”

This puts you in a better bargaining position and means the seller will entertain offers from you that they may opt against, or counter at if the offer were subject to the sale of your home when you still had it on the market.

Once your offer is accepted, and settlement has occurred you are free to move in and begin your new life – hopefully without having acquired too many grey hairs in the process. Navigating the process of selling and buying with as little emotion as possible and treating it as a business deal is the best way to manage risk, avoid the pitfalls people so often fall into and avoid taking a loss financially. For most of us, our house is our most valued asset and is accrued through a lifetime of hard work – the process of selling and buying needs to be treated with this in mind.

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