Buying guide
Guide: Selling & buying a house at the same time
We break down what you need to consider when buying and selling at the same time.
AI summary
Juggling buying and selling a house is a complex process with several options. You can buy first with an offer conditional on selling your home, but this carries risks like a cash out clause and the potential need for expensive bridging finance.
A safer path is selling first, which positions you as a strong cash buyer. Ideally, you can try to align settlement dates when buying and selling simultaneously for a seamless transition between properties.
Selling and buying a house at the same time is a juggling act many Kiwi perform at some point. It’s particularly common in the current market, where high stock levels often give buyers the leverage to make offers conditional on selling their own home. However, there’s no doubt that doing both at once is more complex than selling first and then hitting the market as a cash buyer.
To help you navigate the process, we have broken down the options based on your comfort level with risk.
Option one: Buying first
Choosing to buy first and making your offer conditional on the sale of your existing home is a popular path. But you need to be aware of the risks; in a slower market, you don't know how long it will take to sell your own place. Typically, you will commit to selling within eight weeks, with an option to review if it takes longer.
Things to keep in mind:
- The cash out clause: The vendor of the property you want will usually include this in the sale and purchase agreement. It means they can accept another, more straightforward offer at any time. You’ll typically get 3-5 days’ notice to go unconditional or miss out.
- The price of conditions: If your conditional offer is competing with unconditional bids, you will likely need to offer a more attractive price to tempt the seller.
- Bridging finance: Talk to your bank or a mortgage broker early about a bridging loan as a backup. Be aware that in the current climate, many banks are hesitant to provide these unless you can service the entire debt of both mortgages.
How do bridging loans work?
If you are looking at this short-term loan option, there are two main types in New Zealand:
- Open bridging loans: These are for when you want to buy a new home but haven't yet sold your current one. Banks see this as higher risk, so you’ll need significant equity and a solid plan B.
- Closed bridging loans: These are used when both properties have unconditional sales, and you just need to bridge the gap between the two settlement dates. These are seen as lower risk by lenders.
The downsides:
Bridging finance is an expensive exercise. You’ll be servicing two loans simultaneously, and bridging rates are usually floating (variable), which can be higher than standard fixed rates. There’s also the risk that if your current home sells for less than expected, you could end up with more debt than you planned for.
Moving is a massive job. Taking the time to decide which financial path suits you best helps ensure this 'juggling act' ends with a successful settlement day
Option two: Selling first
Life is often easier if you sell your home first. Even if it means renting for a while, you enter the market as a cashed-up buyer, making you very attractive to vendors wanting a certain sale. You can also try to negotiate a lengthy settlement date on your sale (e.g. 12 weeks) to give yourself more time to find your next home.
Option three: Buying and selling at the same time
You can choose to put your home on the market while actively searching for your next one. This means you’ve already done the hard graft of getting your house ready, had appraisals from agents, and have a clear idea of what your budget looks like.
The ideal scenario in this "juggling act" is to align your settlement dates. By coordinating the date you hand over your old keys with the date you get your new ones, you can move straight from one house into the next.
The old adage applies: 'buyer beware'. Keep one hand on the calculator and the other on the contract. This is one situation where you want your head to win over your heart.
Disclaimer: This information is a general guide and doesn't consider your individual financial situation. We accept no responsibility for inaccuracies. Always get independent legal advice before signing a sale and purchase agreement.
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