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Found your dream home but yet to sell your current one? Act fast to save money and avoid extra stress.

The contract is signed, the champagne drunk, the ”Sold” sticker on the board. Now all you have to do is pay.

For many buyers, this means selling their home and settling in time to finance their purchase – a stressful but common scenario.

And it is one made even more fraught by today’s struggling market in which properties are taking longer to sell.

Many property pundits have suggested the market will continue to fall – meaning some homeowners could do better financially to sell now and buy, say, in a year or two – but homeowners who know how hard it is to find their dream home might prefer to sidestep the uncertainty of price rises and falls by buying before they sell but with as little time between the transactions as possible.

Such a move requires clever planning and speedy work. And nerves of steel, according to psychologist Meredith Fuller.

She says buying and selling houses are times of high emotion for most people but the uncertainty of selling their house and not knowing what they are going to could be emotionally testing for many people because ”a home is very important to a lot of people; it is part of you”.

”The worst thing is to sell first and not find something you love and have to settle for second best.”

And she says holding your nerve is crucial if you begin to ”catastrophise”. ”It is so important to remind yourself there were excellent reasons why you bought before you sold.”

It is a situation Laura and Daniel Barallon know well. The couple, both accountants, began house hunting before selling their Hawthorn East flat.

”We did not like the idea of, if we sold and could not find something to buy, having to rent for a short period of time and then making a rushed decision because we were in limbo,” Mr Barallon says.

While they looked, they decluttered their flat and contacted agent Frank Mlikota of Parkinson, with whom they had dealt previously.

And they consulted their bank, calculating the lowest price they could accept. When they bought their Northcote house with a 90-day settlement, a ”mad rush” had photos of their flat on the Domain website within a week.

With numerous potential buyers, they relaxed – then their agent’s phone went quiet and, as auction day approached, the couple’s nervousness increased.

”Originally, we would have been over the moon with $550,000, then a flat upstairs went for $575,000 and we thought, ‘We would be happy with that,”’ Ms Barallon says.

”We never thought it would not sell – it was about price, how much bigger our mortgage would have to be.” So when their flat sold for $598,000 – $48,000 above the reserve – the relief was enormous.

Despite their anxiety, they believe buying first was a practical option. ”You have to have an understanding of the place you will be selling and what is happening in that area. Are places selling?,” Mr Barallon says.

Agent Shayne Mooney of Nelson Alexander agrees checking the market is vital. ”Be aware of the worth of your property and what similar properties are selling for in the market,” he says. ”And get the house prepared; for example, painting, maintenance, brickwork repointed, carpet replaced.”

Choose your agent in advance – preferably a leader in the area with numerous branches, a large, competitive team and a buyer database.

”Once your property hits the market, they can get in contact with people before it is advertised and alert them,” Mr Mooney says.

”If you are ready for your property to be exposed to the marketplace, you can do that even before the ads go in the paper or on the internet. You may sell before you even have to commit to advertising or go through the inconvenience of a marketing campaign.”

That means having your paperwork – in particular your section 32 vendor statement – ready as quickly as possible.

Property lawyer Andrew Whitelaw says a section 32 remains valid for about three months. But a lawyer or conveyancing company must attach all necessary certificates. Companies that offer super-quick section 32s sometimes do not do this, causing delays at sale.

”It is often better to sell first but it really depends on your equity position,” Mr Whitelaw says.

Describing high-interest bridging finance as ”a potential world of pain”, Mr Whitelaw, of TressCox Lawyers, says substantial equity might make it possible to extend an existing mortgage to pay for the new home.

Negotiating an extended settlement might be possible but the vendor does not have to agree. If the vendor doesn’t, a defaulting buyer not only loses the deposit but is also liable for the difference between the purchase price and what the property is eventually sold for.

”They have to show they made reasonable endeavours but the courts are reasonably lenient to the person who suffers the loss because they are the innocent party,” Mr Whitelaw says.

The experts agree that speed and organisation are the keys to selling fast. Ben Allen, of Allen Moving & Storage, says sellers doing an urgent declutter and storing goods should work out in advance what items will go. ”Make an inventory, then walk through and check what goes to storage,” he says. ”Then get yellow dots and red dots and mark everything.

”We get a lot of last-minute calls for declutter and a lot of people don’t realise how much gear they have got until they start to move,” Mr Allen says.

”I have rocked up to a job and people have barely started. They say, ‘I’m just going to sort it out now.”’

That sounds stressful but Ms Fuller says reminding yourself this is just for a short time and thinking positively about your house-sale prospects will help.

Tips

  • If you must sell your home when you buy, do all you can in advance.
  • Choose your agent and have your marketing campaign ready.
  • Do necessary maintenance and declutter.
  • Work out what is to be stored and choose your removalist.
  • Get your solicitor to prepare for the section 32 vendor statement.
  • If the sale is unplanned, start these tasks as soon as you sign your purchase contract.
  • Request the maximum settlement period for your purchase – at least 90 days.
  • Spend to make money: opt for an extensive marketing campaign to attract buyers fast.
  • Don’t panic – make lists, prioritise and delegate.
  • Outsource – use packers and cleaners.
  • Think positively – tell yourself your house will sell and draw support from friends but be clear you don’t want to hear what a risk you have taken.
  • Exercise to help calm your body.

If your house does not sell at auction, chances are it will sell within a few days. Take your agent’s advice but don’t grab a bad price or back out of your purchase.


Posted by Sue Green – The Age Domain on 3rd December, 2011