If you’re a homeowner thinking about upscaling, downsizing or relocating, you’re likely facing one of the most common dilemmas in the property journey: Should you sell your current home before buying a new one, or buy first and then sell?
Both options come with their own benefits, risks and timing considerations. To help you navigate this decision, you need to consider several factors – the pros and cons of each approach, explore financial strategies like bridging finance, and how to enlist expert advice on managing the logistics of moving in today’s dynamic market.
Option 1: Sell First, Then Buy
Pros:
- Know Your Exact Budget: Selling first gives you certainty about how much you can spend on your next home.
- Stronger Buying Power: With cash in hand or an approved bond, you’re a more attractive buyer in competitive markets.
- Avoid Dual Bond Stress: Banks may be reluctant to approve a second bond, so double check.
Cons:
- Potential Need for Temporary Housing: If you don’t find a new home in time, short-term rentals can be costly and disruptive.
- Pressure to Buy Quickly: You may feel rushed into a purchase that isn’t ideal.
Cobus Odendaal, CEO of Lew Geffen Sotheby’s International Realty in Johannesburg’s Randburg/Craighall says selling first is often the safer route, especially in uncertain markets.
“It gives you financial clarity and puts you in a stronger negotiating position when buying. However, the key is to work with an agent who can accurately time your sale and purchase to minimise gaps.”
Option 2: Buy First, Then Sell
Pros:
- Seamless Transition: Move directly from your old home to your new one without temporary housing.
- More Time to Choose: No pressure to rush into a purchase.
Cons:
- Financial Risk: If your current home takes too long to sell, you could be stuck with two bonds.
- Bond Approval Challenges: Your debt-to-income ratio may affect your ability to secure financing.
- Overestimating Sale Price: If your home sells for less than expected, you could face a shortfall.
Odendaal cautions that buying first can work if you have significant financial flexibility, but it’s risky if the market is slow.
“Bridging finance can help, but it’s expensive and should only be used as a short-term solution.”
Bridging Finance
Odendaal explains bridging finance as a short-term loan that unlocks equity in your current home before it sells, helping you cover the deposit or purchase price of your new property.
When is it useful?
- You need funds from your sale before transfer.
- You must pay a deposit quickly.
- You’re waiting for bond registration.
Key considerations:
- Higher interest rates and fees.
- Typically lasts one to three months.
- Requires proof of expected sale proceeds.
“Bridging finance can be a lifeline,” says Odendaal, “but it’s not a long-term fix. Always consult a financial advisor to ensure it’s the right move for your situation.
“Key questions to ask before deciding include whether you need the proceeds of the sale to buy your new home, how fast homes are selling in your area, whether it’s a buyer’s or seller’s market, whether two bonds are temporarily affordable and if there’s a back-up plan for temporary housing.”
Managing the Moving Logistics
If Selling First:
- Negotiate an “occupational rent” clause to stay in your home longer if needed.
- Arrange storage for belongings in case of a gap between moves.
- Start house-hunting as soon as your home is under offer.
If Buying First:
- List your current home immediately after securing your new property.
- Price it competitively to attract quick offers.
- Work with an experienced agent to streamline the process.
Strategy & Market Conditions
“Market conditions play a huge role,” Odendaal emphasises. “In a fast-moving market, selling first reduces risk. In a slower market, buying first might work – but only if you’re financially prepared.
“A seller’s market means higher demand and it’s therefore easier to sell quickly. A buyer’s market means there’s more supply available and you need to take into consideration that homes might take longer to sell, so buying first could be an option if it’s financially viable.”
Odendaal says there’s no one-size-fits-all answer. “The right choice depends on your finances, market conditions, and risk tolerance.”
Odendaal’s Rule of Thumb:
- If you need your sale proceeds to buy, sell first.
- If you can afford two properties temporarily, buy first – but always have a backup plan.
“Consult an agent early in the process. They can provide local insights, help time your transactions, and guide you toward the best decision for your unique situation.”
