The Perth housing market in 2024 continues to present unique challenges for those considering selling whom also need to buy, primarily driven by a persistent shortage of available properties. This shortage has instilled a significant fear among homeowners, worried they won’t find a new residence if selling their current home first. This concern is not unfounded; with such strong demand, the majority of homes are quickly sold, often within the first week of hitting the market. This rapid market movement leaves sellers apprehensive about potential homelessness, the daunting prospect of having to enter a highly competitive rental market, or the uncomfortable thought of living with relatives or friends.
However, we are here to provide solutions that have already helped numerous homeowners smoothly transition from their current home to their dream home. Here are several options we offer to mitigate the risks and stress associated with selling and buying in today’s market:
Bridging Loans
Opting to purchase your new home before selling your existing property? Consider a bridging loan. This short-term financing option covers the new property’s purchase price, while providing you with time to sell your current home. This isn’t an option for everyone, and might cost a little extra money, but for those that can make it work, it could be a winner. Our expert finance brokers can guide you through this process and help you explore suitable options.
Extended Settlement Periods
If you decide to sell first, before you start, discuss the possibility of securing an extended settlement period with your agent. With it being such a seller’s market right now, it’s not the hardest thing to negotiate into your sale. Recently, we have secured settlements that extend up to 4 months, providing sellers with additional time to secure their next home with much reduced pressure. Just bear in mind, there will still be an approaching end date that isn’t that far along, and new stock is few and far between so ensure that you are comfortable with the amount of extra time.
Lease-back Options
Another flexible solution if selling before buying, involves negotiating a lease-back arrangement with the sale of your property. This means you can continue living in your sold property for a mutually agreed period. This arrangement can offer a far greater amount of time for you to find you next house. We have had buyers willing to offer up to a 9-month lease-back, and in some rare cases even over 12 months. Not a bad option if you don’t mind paying some rent in between. However, remember prices are increasing on a monthly basis, and now that you have sold your property, you won’t be holding an asset that is also increasing in value. Best to find that next purchase as quickly as you can.
Subject-to-Sale Clauses
If you want to stick with buying first, incorporating the subject-to-sale clause in your offer to purchase is the move, and may be the option with the least amount of risk. However, it is generally harder to get these offers over the line when competing with other buyers. Something to consider; subject sale offers generally need to be priced high enough above any other offers to make it appear attractive enough to a seller. Let’s say all other offers were at $1m and a subject sale offer was at $1.02m or $1.03m. A seller might see this as attractive option as they make another $20k to $30k only for waiting another 2-4 weeks for instance. Maybe you don’t want to overpay for the property, but that $20k to $30 will seem insignificant after 7 to 10 years in your dream home. It would be more upsetting if your offer isn’t the winner and when a similar property finally comes up for sale in 2 to 3 months’ time, the price is $40 to 50k higher putting you out of your budget. This is happening to many buyers out there right now.
Final Notes
Navigating through the complexities of today’s real estate market requires creative and flexible solutions. We are committed to thinking outside the box and finding personalised strategies to help our clients, so feel free to reach out at any time if you want help. Some keys takeaways for you are:
- Know what your property is worth, so meet with some agents and get a good understanding of pricing.
- No matter which direction you want to take, if you are borrowing money, go and see your broker or bank first and lock in your finance.
- If you sell first, make sure you have a clear plan in place and possibly a backup plan should it be needed. Make sure your agent is on board with the plan.
- If you buy first, get your property is ready to go prior to buying and have your chosen agent on standby.
