Wednesday, April 27th, 2011 - Toop Real Estate Group
The “buy first, then sell” approach taken by many South Australians could get home buyers in a lot of hot water – unless they are downsizing.

Real estate veteran Anthony Toop says customer surveys show a remarkable trend which sets SA apart from the Eastern states.

“In Adelaide it is all too common practice to buy a new home before selling the one you’re living in,” Mr Toop says. “This hardly ever happens on the Eastern Seaboard.”

Mr Toop says that the practice may be well founded in a boom market when property is highly contested, prices are escalating and good homes are sold in a matter of days.

“But right now there is certainly no shortage of beautiful homes available and this approach to transacting property makes little sense,” he says.

“While the knowledge that you will have a roof over your head may offer security, the financial burden imposed by buying first can be far from comforting. It’s just not worth the risk for most people in the current market.”

People move house for a multitude of reasons, with the most common being to upgrade and take that next step up the housing price ladder.

“This often means tightening the budget for the first 12 months or so, while you build up the equity in your home,” the real estate veteran says.

“If you go ahead and buy first, you are taking a punt on how much cash you’ll get in your pocket from the sale of your current home.

“If you find yourself saying ‘Well if we get an extra $30,000 for our property, we can afford this one – let’s buy it’, then batten down the hatches and cut up the credit card. In a market that’s slowing, getting top dollar by boom standards is a lottery ticket you simply can’t rely on. What you can rely on is the cold hard cash from a completed sale.”

Then there’s the topic of bridging finance. Mr Toop says that people who are downsizing to a less expensive property don’t need to worry.

“Go for it! It’s highly likely that your sale will cover any costs and you’ll still come out better off. But if you’re upgrading, this exercise adds cost to an already pricey process. Really, this is a last resort. Like mortgage insurance, if you can avoid it, do!”
Mr Toop adds that this bleak scenario assumes you buy your new property “cash unconditional”.

“If you buy it ‘subject to the sale’ of your own home and your current property doesn’t sell, then you could risk losing the one you had your heart set on.”
Conversely there is a risk when you sell first, too, and that’s not being able to find the home you really want.

“A longer settlement or short term rental can easily solve this problem, plus the added attraction of you being a ‘cash buyer’ will put you at the forefront when making any offers on a new home.”

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South Australia’s largest independent residential real estate agency and the most highly awarded in the nation was founded by Anthony Toop. It has become a national icon in marketing and selling in the residential real estate industry having won National Real Estate Agency of the Year in 2007 and is the only real estate agency in the industry’s REISA Hall of Fame. Toop&Toop is also the only real estate agency in the Family Business Association Hall of Fame as an iconic business in South Australia. Founded by Anthony in 1985 has won virtually every major state and national business award since 1993 - and has received recognition both nationally and internationally for achievements in business excellence. In April 2009 Anthony was recognized nationally by the Real Estate Institute of Australia by receiving the nations “Community Service Award” for work done with charities and with the Community. He also received the Young Presidents Organization (YPO) Long Life Leadership regional recognition in December 2008 the “Legacy Honour 2008”.
Mandy Wurth, General Manager, Toop & Toop
P: 08 8362 8888
W: www.toop.com.au

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Real estate, toopy, Anthony Toop, house prices, should you buy before you sell?

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