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Selling and Buying a House at the same time: Explained

Often when you move home you will be both selling and buying a house at the same time.

While there are some exceptions to this rule, such as if you are a first-time buyer, purchasing a second home or buy-to-let, or moving into rented accommodation, this is the situation most UK homeowners face when it comes time to selling.

As a seller you have to decide whether to buy first, sell first, or buy and sell simultaneously. All three methods offer both benefits and downsides. And so, depending on your situation, it is vitally important to make the right decision over which way is best for you.

In this step-by-step guide, will look at what it means to simultaneously buy and sell property and how to do so, ask why you might want to buy and sell concurrently, go through the advantages and downsides offered by this approach, and find out about the alternative methods you can also use when selling property.

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Understanding Buying and Selling property simultaneously

Buying and selling simultaneously refers to a process where a homeowner sells one property at the same time as purchasing another.

The process involves finding both a buyer for your property and a seller with a property you want, and then convincing them to conduct their transaction at the same time, exchanging and completing almost concurrently (typically always on the same day). Using this approach allows you to use the money you receive for selling your old property to buy, or at least partially fund, your new one.

The group of buyers and sellers involved in such a transaction is called a property chain. House chains can grow to involve substantially more than three people in the above example. This happens if more than one party in the chain is buying and selling simultaneously— for each party doing so, the length of the chain will increase by one.

When it’s time to finalise the house sales, each buyer and seller in the chain sends their deposit and contract to the next person’s legal representative in a sequential manner. The final step, called completion, is also done in sequence, where payments are made, and keys are exchanged. Imagine this process like a group of hermit crabs moving in a line, each leaving its old shell and moving into a bigger one that was just vacated by the crab in front of it.

How to Buy and Sell a House at the Same Time: Step-by-Step

The process of selling and buying a house simultaneously can be overwhelming. Even when broken up into a step-by-step process, and completed perfectly, house sales can fall through, with many risks completely outside your control. Nonetheless, by completing each of these steps promptly and in order, you can help your transaction have the highest chance of success.

Preparing for the Sale

Step 1: Get Your Property Valued

To effectively put your property on the market, you will first need to get it valued. This ensures that you set a competitive price that is attractive to buyers but doesn’t shortchange you.

Step 2: Assess Your Current Equity and Finances

Check how much you owe on your property and evaluate your financial resources to develop an accurate budget. To do this take the reasonably expected sale price for your property and deduct all outstanding loans including mortgages and any early repayment fees (if applicable). By doing this you will arrive at the equity that is currently available in your current home. This is effectively the sum you are able to put down as a deposit against your new property purchase.

Step 3: Consult a Mortgage Broker

Discover what finance deals are available to you. Options may include porting your current mortgage or finding a more favourable deal elsewhere.

Step 4: Collect Your Key Documents

Gather the necessary documents such as the property’s energy performance certificate, certificates for any building work, gas and electrical safety certificates and any guarantees or warranties for appliances included in the sale.

Step 5: Prepare Your Home for Sale

Make your home presentable by tidying, carrying out any essential repairs and decluttering. You may opt to hire a professional home stager for assistance. Remember first impressions count in home sale and you so kerb appeal is extremely important in those first few minutes.

Listing Your Property

Step 6: Find an Estate Agent and List Your Property

Select an estate agent suitable for your type of property. Check their track record in selling similar properties and enlist their services to put your house on the market.

Step 7: Appoint a good Conveyancer/Solicitor

Find a conveyancing solicitor or licensed conveyancer who specialises in property law. This is essential for the legal aspects of the transactions.

Accepting an Offer and House Hunting

Step 8: Agree to a Sale

Once you receive a satisfactory offer, agree to the sale. The house sale process typically takes between 12-16 weeks but varies depending on various factors. Some take much longer.

Step 9: Start House Hunting

With a buyer lined up for your current property, begin searching for a new house. Having a buyer already in place makes any offers you put forward more appealing to sellers.

Step 10: Reevaluate Finances and Make an Offer

Re-visit your house buying budget and get ready to make an offer on a new home. By having a buyer already lined up you are in a good position to negotiate. However, avoid pushing too hard, you don’t quite have the sway of being a chain free buyer.

Step 11: Formalize Your Mortgage

After receiving an offer in principle from your mortgage broker, apply for your mortgage by completing the lenders full application form.

Finalising the Purchase

Step 12: Instruct Your Conveyancing Solicitor

Inform your conveyancing solicitor to proceed and ask them to conduct all relevant conveyancing searches on the property you plan to purchase.

Step 13: Commission a Survey

Order a building survey on the new property. There are various types of surveys with differing depths and costs; choose one that suits the property’s condition.

Step 14: Exchange Contracts and Set Completion Date

After assessing the survey and searches, decide whether to proceed and exchange contracts. Also, set a completion date for the transaction. Upon receipt of your building survey, if necessary, re-negotiate the purchase price to cover the cost of any essential works.

The Moving Process

Step 15: Organise Your Move

Start organizing the moving process, which involves packing, redirecting mail, and handling utility transfers. Hiring a removal company can be helpful.

Step 16: Completion Day

On the completion day, money is transferred, keys are exchanged, and usually, all parties move to their new homes. The conveyancers will handle the final legalities, such as registering the transfer of ownership and paying stamp duty.

What are the alternatives to buying and selling property at the same time?

Buying first

Theoretically, buying first, that is buying your new property before you sell your old one, is quicker and less stressful.

This is because it allows you to take your time over moving, giving you time to find the perfect home. This also ensures that you will not be pressed when sorting out either your purchase or your sale.

However, as most people cannot afford to buy a new home without using the capital obtained from selling their old home this approach is rarely possible.

Typically, buying a new home without selling the old one immediately is the preserve of wealthier buyers.

Some companies do offer everyday homeowners finance in the form of bridging loans to help them proceed. However, bridging lenders typically charge higher interest rates and fees for both set up and exiting loans.

Selling first

The other alternative to buying and selling at the same time is to sell your house first and then find a new home to buy. This typically involves selling and then moving into rented accommodation, or in with family or friends, before then hunting for and purchasing your new property.

However, this comes with significant downsides. These include having to move home twice in quick succession, pay for removal twice, as well as potentially having to pay for both storage and temporary accommodation.

There is also the risk that it may take some time to find your next home and in doing so you could find yourself ‘out of the market’. That is to say you could lose out on the value of rise in house prices whilst searching and buying your new home. Of course, this could work to your advantage in a slowing housing market where house prices begin to fall.

Nonetheless, by taking this approach you put yourself into a stronger position when you later purchase property. Because your funds are available immediately and not reliant on the sale of a property, many sellers will choose the quick, relatively certain sale your offer represents over someone who is in a property chain.

What are the benefits of Buying and Selling a House at the Same Time?

While buying and selling simultaneously is a complex process, it offers some advantages over the alternatives, primarily from an economic point of view.

By buying and selling at the same time, you could save on a wide variety of things, such as the interest on a bridging loan, or paying double council tax and utilities compared to if you bought first. You will also save on the cost of moving twice and storing your stuff when compared to if you sold first. Buying and selling a property at the same time also greatly eases the hassle you will experience when compared to selling first, as you will only need to pack up and unpack once.

Selling and buying a property at the same time also allows you to maintain market momentum. Property markets can be volatile, and by being part of a chain you can ensure you buy and sell in the same market conditions. This can be very advantageous if prices are rising, although if a fall is consistent, selling first can have it’s benefits.

A final benefit when selling simultaneously compared to buying a house first is that you will be able to afford to put down a far greater deposit on your new property than you would otherwise.

What are the Drawbacks to Buying and Selling property simultaneously?

Unfortunately, buying and selling property simultaneously is not the easiest solution.

Indeed, this approach has a bunch of potential drawbacks— many of which derive from being in a property chain.

The core problem with property chains is if one person in the chain has a problem. Say if something came up on a building survey, or someone’s finance fell through, and they have to pull out of their sale or purchase. When this happens, the entire chain cannot proceed as each party is dependent on all other parties.

Either the parties will have to abandon the transaction, or the chain will have to be repaired. This can be done either by an estate agent finding another property or buyer to replace the one that abandoned the chain.

In addition to being at risk of collapse, there is also the simple fact that house chains are inherently slow. The more parties involved in a transaction, the longer the chain will take to complete. This can be for a variety of reasons, including slow conveyancers, poor communication, someone having difficulty finding a buyer or seller, and additional negotiations required by other parties.

On top of the issues posed by a property chain, buying and selling simultaneously can be very stressful. You have to handle all the work required when both buying and selling, including deadlines, negotiations, rapid decision making and managing your timing. Following the exchange of contracts you will typically have just one week or two to prepare for your move.

Finally, buyers who are simultaneously selling tend to also have reduced negotiating power when compared to buyers who are not reliant on a sale. This is even the case if they have a buyer already in place as most sellers value the additional certainty and speed that a chain-free buyer can offer. When attempting to buy a property while selling your own, you could be vulnerable to being gazumped. This involves the seller accepting an alternative offer (greater price). This remains perfectly legal to this day.

In Summary

Selling and buying a house at the same time is often the most practical and only option for many. It combines the convenience of moving directly from your old home to a new one and usually makes better financial sense compared to buying first or selling first. However, buying and selling a house at the same time is not without its challenges.

The property chain that’s central to this process can be a double-edged sword. It helps in the smooth transition but is vulnerable to delays if any party in the chain faces issues. This reliance can sometimes lead to real frustration and long waiting periods. Good communication and cooperation among all parties are key to keeping a house chain complete.

Additionally, managing both the sale and purchase of a property simultaneously can be stressful and requires strong organisational skills. It is important to be efficient and to keep cool under pressure. Engaging the services of a reliable estate agent and good conveyancer can help ease some of this burden.

In short, if you’re considering buying and selling a house at the same time, be prepared for a busy and sometimes challenging period. Assess your situation, stay organized, communicate well, and get the right help. This method is not easy, but with the right approach, it can be the most convenient and economical choice.

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