Making an offer on a house before selling yours

Every once in a while a dream home comes along - great transport, good schools and amenities galore - a house that ticks every box! When you’re in the market for such a property, it can be tempting to throw all caution to the wind and make an offer. The question is: can you make an offer on a house before selling yours?

Making an offer on a house before selling yours

The simple answer is yes, you can make an offer on a property before selling your own house, but nine times out of ten, this is not the best route to take. In fact, it can be quite risky.

Homesellers are inclined to accept the best offer from a proceedable buyer - someone who meets the required criteria for offer acceptance. If you’ve sold a house before, you can empathise:

1. You’re selling your greatest financial asset. Selling to a secure buyer with proven finances is the most sensible thing to do.
2. Selling to a first-time buyer or a cash buyer (both chainless) is a much more attractive prospect than selling to someone who has not even begun the process of selling their own home.
3. If you do decide to sell with a buyer who has not yet sold their home, there’s a chance their home won’t sell in time for the completion of the sale. If this happens, your sale, along with the property chain you belong to, will be in tatters.
4. Even if the buyer does sell their property, they may (in their hurry to meet the deadline) settle for an offer that’s a few thousand shy of the price agreed for your home. The resulting negotiations may see the buyer request a lower sale price - leaving you either out of pocket, or having to start the whole process again with a different buyer.

Do market conditions affect making an offer on a house before selling yours?

Yes, they do. In a seller’s market, where there is greater demand than supply, homesellers entertain a greater choice of offers, and buyers compete with one another to buy. In such a market, sellers are less likely to consider offers from those who haven’t accepted an offer yet.

But I’ve found my dream home!

If you’re really set on making an offer before selling your own property, there are some options to consider.

1. Take out a bridging loan

Bringing loans are a type of secured loan that gives you access to the funds you need to buy a new property before your old one sells. They bridge the gap and help you to purchase a new home as a cash buyer.

As a secured loan, bridging loans take your property as collateral. Naturally, this can be a risky endeavour.

2. Rent out your current property

If you’re finding it difficult to sell your existing property, it might be worth changing your current mortgage to a buy-to-let mortgage, and keeping your home as a rental property. You will still need to pay for the deposit on the next property though, so you’ll need to find considerable savings elsewhere.

3. Cash house buyer

There are cash house buying companies available who can buy your home in a quick turnaround, but for 20 - 40% less than what you’d get through an estate agent. As a result, you’re unlikely to upsize from your previous home.

The cash house buying industry is also highly unregulated. As a result, plenty of companies take advantage of your need to sell, and reduce their offers at the very last minute. You can read more about UK cash buying companies in our Cash House Buyers category.

Ultimately, while it is possible to make an offer on a house before selling your current property, you will never be in a strong position to buy, especially compared to chain-free and cash buyers.

So how can you speed up the process of selling your home in time to make an offer? The most reliable way is to choose the right estate agent. While not as quick as selling with a cash buying company, a good estate agent will market your home and attempt to sell it for as much money as possible.

As with any service, it’s important to compare the best options to find the top product. The best way to do this with local estate agents is with GetAgent’s Agent Comparison Tool, the UK’s number one agent comparison service.

Using data from the Land Registry, the tool ranks the top six local agents according to:

• The most experienced in selling property in your local area
• The most likely to achieve your property’s asking price
• The quickest to sell in your local area

Once you find an agent you like, you can book a free, no obligation valuation with that same agent.

So is it better to sell your house before making an offer?

It’s hard to say whether it’s better to complete the sale of your home before buying a new one. There are some clear benefits, but there are also some downsides. Most people tend to buy a new house at the same time as selling their old one, usually accepting an offer on their property before putting their own offer forward.

Advantages of selling your home before making an offer

• Once you’ve sold your home, you’re free to view any property that’s within your clear budget.
• You have much more negotiating power as a cash buyer.
• You may experience less stress than buying and selling at the same time.

Disadvantages of selling your home before making an offer

• You will need to find somewhere else to live during this period. This might not only prove expensive, but disruptive to your life.
• You will have to put the bulk of your belongings and furnishings in storage. As with rent, this can become expensive.
• Because you’ve sold your home already, you will have to settle for a home that meets your budget. In other words, you might have been able to sell for more had you known which property you wanted to begin with.
• Tenancy agreements usually require a minimum stay. Vacating a property earlier than the contract’s stated timeline could leave you open to legal action.

Can I sell and buy a house at the same time?

Yes you can - it’s what most people do. The buying and selling process can be stressful, and at times, a lot to deal with, but most homesellers are able to successfully juggle the two.

If you want to ensure maximum success, here’s some tips:

1. Use a settlement contingency

This is a clause you can add to your offer on your dream property. By including this clause in your offer, you are establishing that your offer is contingent on the sale of your home completing successfully.

To use a settlement contingency, you need to have received an offer on your home first. It’s worth noting that contingency clauses won’t make your offer any more appealing. In fact, they can diminish your offer’s prospects. However, they are a good tactic for those who are worried about selling in time.

2. Make the most of the negotiation period

If you need your transactions to complete simultaneously, make the most of the negotiation period. For example, if you want the completion dates of your sale and purchase to be closer together, but there are requests that the buyer wishes fulfilled, you can use this to your advantage and make a deal.

3. Exchange contracts on the same day

If possible, try to exchange contracts for both your home sale and purchase on the same day. This will allow you to use the funds your buyer sends towards your new deposit.

For more tips and tricks, read our blog on ‘Buying and selling at the same time’.

Being a reliable buyer

In any home purchase, it’s important to demonstrate your reliability as a proceedable buyer and boost your attractiveness among the competition.

How to show you are a reliable buyer

1. Know your budget

Before you start looking for your dream home, you need to know the extent of your budget. Your budget is dictated by:

• How much your current house is worth

Get an Online House Valuation for a rough estimate, or request a free valuation from a reliable estate agent.

• How much equity you have in your home

The more of your property you own in an existing mortgage agreement, the better the mortgage you can take out for a new home.

• How much you have in your savings

Your savings will come in handy, especially for the deposit.

• How much estate agent fees are

Once your home is sold, you will owe your agent a small percentage cut of the profit. Having a vague idea of how much you’ll owe, will inform your choice of property. You can find out how much estate agent fees are in your area over on our Agent Fees page.

• The amount of Stamp Duty Land Tax you’ll pay

When you buy a new home, you will need to pay Stamp Duty. This tax can get expensive, so having some idea of how much you’ll pay will help in the long run.

• The amount of Capital Gains Tax you’ll owe

Capital Gains Tax is a levy on the profit you make from selling a property that has increased in value since you came into ownership of it. You don’t have to pay Capital Gains if you’re selling your main residence.

2. Get a Mortgage Agreement in Principle (AIP)

Before you take out a new mortgage, it’s useful to get some indication from your mortgage lender that they are willing to lend. Many home purchases have been disrupted in the final stages because a lender has pulled out. An Agreement in Principle not only provides proof that the lender is willing to finance your purchase, but reassures homesellers that you’re a proceedable buyer.

If you’re struggling to find a suitable mortgage provider, hire a mortgage broker. Brokers are paid specialists who can help you find the best mortgage deal for your plans.

3. Instruct a conveyancing solicitor

Finding and instructing a conveyancer early will suggest that you are keen to get the purchase rolling, with contracts ready to be exchanged.