Buy First or Sell First?

How to Navigate the Property Changeover with Confidence

In Perth’s tightly held real estate market, where properties are scarce and the right home rarely lingers, one question comes up time and time again:

Should I buy before I sell, or sell before I buy?

Whether you’re upsizing for a growing family or downsizing now the children have moved out, timing the transition between homes can feel like a high-stakes game of musical chairs.

The answer? It depends on your financial situation, risk tolerance, and the current market environment. Below, we unpack the pros and cons of each approach, and introduce some creative strategies more people are starting to consider.

 

Buying Before You Sell

Ideal for those with financial flexibility or when the right home appears unexpectedly.

Advantages:

• You secure your next home without delay, avoiding the regret of missing out.
• You can make any required alterations before you move in.
• Depending on your financial situation, gives you the luxury of time to transition at your own pace.

Considerations:

• You may feel pressure to sell quickly, especially if you’ve already committed to a purchase.
• Carrying two mortgages or arranging bridging finance can be stressful and costly.
• Requires confidence in your home’s saleability and market value.

The Pivotal Points:

Although bridging finance can be expensive—maybe $10,000, maybe $20,000, maybe more—the thing to bear in mind is that you may well save this money or more in the process of negotiating with a clean cash offer. Cash offers hold so much weight in the process of negotiation. For the seller, it means that the deal is done and there is no need to worry about anything unravelling.

The difference in the price you may pay for a cash offer, compared to a finance offer or a subject-to-sale offer, could be two or three times the cost of bridging finance (for a few months).

So apart from being a successful buyer and securing the property that you want to be your next home, the savings can be considerably more than bridging costs.

In the process of backing yourself with a cash offer and a bridging loan (taking advantage of the discount in the price that you may achieve), it’s important to also be conservative in relation to the value of your own home. A worst-case scenario selling price is the figure to work on when navigating your way through this scenario.

The Options:

When making an offer on your dream property, you typically have a few options:

1. A cash unconditional offer. However, not many are in the financial position to buy their next home without selling their current home.
2. Bridging finance (as mentioned above).
3. Subject-to-sale offer. This is typically paired with a simultaneous settlement so that both properties settle at the same time and facilitate a smooth transition between the two.

Subject-to-sale offers carry risk for the seller, and in a multiple-offer scenario, a cash or subject-to-finance offer will usually prevail—unless the subject-to-sale offer is considerably higher in price and the buyer can provide assurance that their property will be priced to sell quickly. It’s worth noting that in a market where stock is tight, the sale of the subsequent property is more likely than not, so ‘subject-to-sale’ offers are not as poorly considered as they might be when stock levels are high and buyer numbers are low.

 

Selling Before You Buy

Ideal for those wanting financial certainty and a clear budget.

Advantages:

• You know exactly what you have to spend, with funds available and no guesswork.
• Avoids the risk of carrying two homes or overlapping financial obligations.
• Can make you an attractive buyer with a clean, cash-ready offer—once you are sold.

Considerations:

• May result in a period without a home, requiring interim rental or storage solutions—unless you can negotiate a rent-back from the buyer (more probable when stock is tight and buyers must meet the seller’s wishes to secure the property).
• If your ideal property does not come up quickly, you might feel rushed to buy. This is quite likely when stock is tight, but what is worse is having your one and only dream home come up for sale and you miss it—then you’re left waiting months or even years for the next best thing in a super tight market.
• The market could shift while you are in-between homes, potentially impacting affordability. This is a risky place to be, but there have been many occasions when people have sold for a high price when stock is low and then purchased well when prices have leveled out a little with more listings and more competition between similar homes.

Getting Creative:

Here are lesser-known options you can combine with the above to find a creative solution to your situation:

• A leaseback — sell your home but remain as a tenant for a fixed period, giving you time to secure your next purchase.
• A long settlement — offering up to six months or more between contract and move-out date.
• A special condition — allowing you to accept an offer subject to securing an unconditional offer on another home within a specified time. The more unique the property you’re selling, the more likely buyers will accept this condition.

These tailored strategies are becoming increasingly popular and can help bridge the gap without compromising lifestyle or financial peace of mind.

 

What’s Right for You?

There’s no one-size-fits-all solution. The right approach depends on your risk profile, goals, and the level of competition in your desired location.

In reality, it’s crystal ball stuff, but at Space we have navigated them all and have an idea as to what will more than likely work—and what just may not.

Along with the above ideas, it’s also worth reaching out to agents selling in your area of preference to make sure they can inform you of any off-market properties that may become available. In some circumstances, these sellers may be more time-relaxed and comfortable accepting an offer with a subject-sale clause, giving the buyer time to sell their property.

Either way, in a market low in stock and high in competition, have a plan to give yourself the best chance of securing your next dream property.

 

Justin Davies
CEO & Founder
M: 0419 909 350
E: justin@spacerealty.com.au