Page 15 - Smartline eBook - Upgrading your home
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- It’s usually better to sell first in a slow or declining market as prices are likely to be higher when you sell than when you buy later on.
Buying first:
- If you see the property of your dreams before you have sold your existing home, you may choose to buy first.
- If your home is ready to sell, you may be able to avoid the expense and hassle of finding short-term accommodation in between transactions.
- It’s usually better to buy first in a heated or rising market as prices are likely to be lower when you buy than when you sell later down the track.
- You may have to take out bridging finance until you sell your existing home and this is expensive. If you buy first in a slow market, you may not be able to sell quickly for the price you want, which means you will be making repayments on your bridging loan for longer. You risk having to sell your property for less than you wanted, to comply with your bridging finance obligations.
When is it a good time to upsize?
The best time to upsize from a financial perspective is usually when property prices are flat or declining. Upsizing might feel risky in a market that is correcting because ideally you don’t want to sell at all in this environment. However, when values come down, higher end properties that were previously out of reach can become more attainable. And, even though an upsizing vendor will 'lose' something when they sell, the 'saving' when they buy a more expensive house is greater.
For example, if the market has fallen by 10 per cent, you might sell your million-dollar house at a 10 per cent loss ($100,000). But if you upsize to a $1,500,000 property, which has also lost 10 per cent ($150,000), you are effectively gaining $50,000. It is easy to get paralysed by market sentiment and stay put in a declining market, but it can actually be a unique opportunity to upsize.
Be aware, however, that sometimes higher end properties lose or gain value at
a different pace to lower end properties. This means the ‘savings’ effect can be heightened or dampened depending on which way the market segments are moving. Be sure to do your research.
Top tips when buying
1. Make sure your finance has been approved.
2. Understandwhatapropertyisworthandwhy.
3. Negotiatehardandfeelfreetowalkaway.
4. Makealowbutfairofferbackedupwithachequeand a signed contract.
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