Purchase new build, when to sell existing house?

bensboys

Hello all,

We have just put down a booking deposit for a new build which will take about 12 months to complete. We will need to sell our current home to part fund this purchase. The builder of the new house will require 10% of the cost of the new build upon signing contracts. We have the funds available to finance this without putting our own home on the market.

Is it better/safer to seller our home first and then sign contracts? This would leave us trying to find a short term rental for 6 months for a family of 5....

Is it better to sign contracts using our own funds and put our home on the market in 6 months?

Our home is in an area where houses sell quickly so this shouldn't be a problem.

I am interested to hear others experience in this situation.

Thanks

Gumbo

Where are both houses located?
It could take one week to sell or it it could take one year!

Depends on the market in the area but I would be thinking of selling asap.

bensboys

Both houses are located within 2 miles of each other in Cork city. All houses around us that have sold within the last 3 years have sold very quickly.

The_Conductor

Its a hard-one to call- because there can be all manner of delays in building a new property- however, and personally- I'd be inclined to delay putting it on the market until after Christmas- keep on top of the builder and find out how the new build is going- and specify a move out date to try suit when the new build is minimally ready- and if it means living out of bags or whatever, just do it.

Property prices may be continuing to increase- however, there are too many unknowns on the horizon to make putting things on the long finger any longer than absolutely necessary, dangerous in my opinion...................

Lumen

Not directly comparable as not a new build purchase, but I recently put my old house on the market around the time I exchanged contracts on the new house. The preceding couple of months (after going sale agreed on the new house) I used to tidy up and redecorate.

The only downside was the slight discomfort of limited insurance on an empty property. Maybe consider getting someone you trust to house sit.

Going back a few years, my experience of buying a new build is that there are an amazing amount of mistakes it's possible to make in building a house, and the last thing you need is to be under time pressure to get them rectified.

bensboys

Thinking this through all weekend, there is 50k required upon signing contracts.

I estimate that if the sale goes through as I would expect we would need to rent from Mar17 for a minimum of 6 months and also get all our furniture stored for that time. The cost of this would be around 20k.

I think we will sign contracts now and put our house on the market next spring.

4ensic15

bensboys wrote: »

Thinking this through all weekend, there is 50k required upon signing contracts.

I estimate that if the sale goes through as I would expect we would need to rent from Mar17 for a minimum of 6 months and also get all our furniture stored for that time. The cost of this would be around 20k.

I think we will sign contracts now and put our house on the market next spring.

If the property market tanks and you can't sell your house next year what will happen?

looksee

I don't know if bridging loans still exist but we had one for 18 months, many years ago, it was a very expensive business. (In our case it was because a building society (for the purchaser) was not handing over the cheque to pay for our old house, they were claiming having granted loans, but not handing over the money. It took intervention by the Dail to sort it out.)

bensboys

4ensic15 wrote: »

If the property market tanks and you can't sell your house next year what will happen?

Fair point and this is the worst case scenario that we face. In all honesty if this happens we lose €50k.

On the other hand if we sell now and in the intervening 6-12 months the economy collapses and one of us lose our jobs we don't have a house.

I suppose what I am trying to say is anything is possible of course and we are trying to make the best calculated risk for us.

Although this is proving more difficult then I expected.

bensboys

looksee wrote: »

I don't know if bridging loans still exist but we had one for 18 months, many years ago, it was a very expensive business. (In our case it was because a building society (for the purchaser) was not handing over the cheque to pay for our old house, they were claiming having granted loans, but not handing over the money. It took intervention by the Dail to sort it out.)

From our conversations with the bank bridging finance is a thing of the past.

bensboys

bensboys wrote: »

I estimate that if the sale goes through as I would expect we would need to rent from Mar17 for a minimum of 6 months and also get all our furniture stored for that time. The cost of this would be around 20k.

Another reason why there should be more unfurnished houses on the rental market.

4ensic15

bensboys wrote: »

Fair point and this is the worst case scenario that we face. In all honesty if this happens we lose €50k.

On the other hand if we sell now and in the intervening 6-12 months the economy collapses and one of us lose our jobs we don't have a house.

I suppose what I am trying to say is anything is possible of course and we are trying to make the best calculated risk for us.

Although this is proving more difficult then I expected.

Not alone can you lose your deposit, you can be sued for any loss suffered by the vendor, if the property has to be sold at a lower price after you have defaulted.

the_syco

bensboys wrote: »

Both houses are located within 2 miles of each other in Cork city. All houses around us that have sold within the last 3 years have sold very quickly.

Will the new house be a one-off, or part of an estate, and if the latter, how will the building of the estate effect your house sale (due to supply and demand)?

bensboys wrote: »

I estimate that if the sale goes through as I would expect we would need to rent from Mar17 for a minimum of 6 months and also get all our furniture stored for that time. The cost of this would be around 20k.

I'd wonder if an estate agent would know of an unfurnished house for you to rent out?

bensboys

the_syco wrote: »

Will the new house be a one-off, or part of an estate, and if the latter, how will the building of the estate effect your house sale (due to supply and demand)?


I'd wonder if an estate agent would know of an unfurnished house for you to rent out?

The new house is part of an estate and consists of less than 20 houses, half of which are already sold. This shouldn't affect the sale of our house.

I mentioned this to the estate agent and he maintains that short term rentals in the area are next to impossible.

the_syco

bensboys wrote: »

he maintains that short term rentals in the area are next to impossible.

No-one need to know how sort it is until you have a house to move into, tbh.

StiffOldMan

Well when we went sale agreed in march our vendor dragged us into a chain as they refused to leave their house until they moved into their new house. It was painful for us as we were ready to move in (with a baby quickly on the way) but I can see from their point of view how risky it would have been to sell and then move into rented accommodation or relatives house etc. If something went wrong with their purchase they could have been stranded, but we had our own problems and it nearly got to the point that we were going to exercise our rights under the signed contracts to force them to act but luckily it didn't come to that. If you decide to hang onto your house until you move into your new house, make sure the purchaser knows this and put it into the contract so everyone knows when closing is going to be, or at least a good estimate.