Category Archives: Selling Tips

Subject To Sale: How To Buy A House Before Selling [VIDEO]

Blog, Selling Tips

Want to buy a house before selling your current one, but not sure how? Learn all about a subject to sale offer…

Maybe you’re ready to upgrade to a bigger, better home than you’re in now, but due to tight finances you need to sell your current house before you can afford to buy a new one.

The good news is, there is a way for you to buy a house before selling yours. It’s called a subject to sale or ‘subject sale’ offer.

Subject to sale contracts do need more careful attention to detail, but they often succeed and proceed smoothly to settlement.

 

 

What is a subject to sale offer?

A subject to sale offer is a condition that allows you to put an offer in on a home you want to buy (either to upgrade, or downsize), and it will only proceed subject to the sale of your current house.

 

When are subject to sale offers beneficial for buyers?

In most cases, if you sell your current home first and then look for a new home, odds are you will get the best possible price for both transactions. But depending on your circumstances, this may not be viable for you.

Subject to sale offers can be very beneficial if you’re in one of the following situations:

  • You’re thinking of upgrading or downsizing into a better home for your situation.
  • You want to buy a house before selling, to avoid moving twice and the pressure of finding somewhere to live in the meantime.
  • You’ve found a house but need to sell your home first, so you can use the funds to buy the new one.

In fact, over 73 per cent of our buyers and sellers are in this position – and the percentage is only getting larger with the tight lending conditions.

 

How are subject to sale offers beneficial to buyers?

BENEFITS

  • You won’t need to borrow anything, or as much money from the bank to afford your new mortgage (depending on the amount of equity available in your current home).
  • You won’t need to move twice, if your current home sells before you have found a new home to buy and you need to rent in the short term.
  • You won’t need to worry about paying for both a new mortgage PLUS your rent if you buy a new home before your short-term rental lease is up.

 

What are the risks of subject to sale offers for buyers?

RISKS

  • Your subject to sale offer may be beaten by more competitive buyers (with cash or finance offers).
  • You may need to sell your home for a lower sale price.
  • You might not sell your home within a reasonable time frame, and could potentially lose out on your dream home.
  • You may need to pay a premium on your dream home. Sellers are justified in asking for a higher sale price from you, for the advantage and protection of settling after the guaranteed sale of your current house.

 

What is the 48 hour clause (or subject to sale clause)?

This is usually combined in the ‘subject to sale’ contract as a special condition.

It means if someone else comes along with a cash or finance offer, you have 48 hours (or two business days) to go unconditional, and get either an offer on your house, or get home to home finance (previously known as bridging finance).

If you can’t do this within 48 hours, then the cash or finance offer will take precedence over yours, and you will miss out on your dream home. Which is why it pays to be prepared…

 

How to give your subject to sale offer the best chance of success

  1. Have your house ready to sell, that day

You need to have your house ready, when you go looking for homes.

When you sign an offer and acceptance with a subject to sale clause on it, you’re saying your home will be going on the market that day, and will be selling for a certain price. A good real estate agent will already be thinking about buyers that they can get through your home to make the deal happen for you.

  1. Stick with the agent that has your dream house listed for sale

Get them to sell your home. They have a vested interest in making sure everything goes forward, but more importantly, they know what’s happening with the sale of your home, and can communicate it to the owners of the home you’re looking at buying.

  1. Be very, very sensible about the price you list your home for

Remember, it’s not about you creating a record in your suburb, it’s about you being able to get your home sold in the first place.

Sometimes that might mean forgoing 5 per cent or 6 per cent of the sale price – so you can move to your dream home. Which on a lot of occasions is going to be a bigger home, on a bigger block, with extra room for the kids, a bigger kitchen for the cook of the family, or a workshop.

Focus on the reasons why you’re moving, and you’ll have a better chance of pricing your home for sale correctly, and allowing your subject to sale offer to proceed.

 

As always, if you have any questions about how subject to sale offers work, feel free to give us a call on (08) 6254 6333 or contact us here and we can talk you through the process.

Should I Sell or Rent My Property?

Thinking of upgrading to a bigger home, but can’t decide if you should sell your current property, or rent it out as an investment property?

WA has just recorded the strongest rental expectations in Australia for the next 2 years, according to the 2019 NAB Residential Property Survey, coupled with the lowest vacancy rate in six years. So if you can afford to, now is a great time to upgrade into something bigger, and keep your current home as an investment property.

 

“Provided you can afford it, you could make yourself an extra $40,000-$60,000 more, if you hang onto your home and sell in the next two to three years, thanks to the state of the WA market and economy.” – Brendan Leahy, CEO of Naked Real Estate

 

Hear Brendan’s top #3 considerations to help you make the best decision for your situation…

  1. Can you afford to keep your home as an investment property?

If you do decide to rent out your home, you will still have your usual rates to pay, plus ongoing maintenance and repairs. With a rental, hot water systems can fail, and air conditioning systems may need work. So provided that these costs won’t stretch you too thin, I would recommend holding onto your home for another two years or so.

 

This is because the core fundamentals (namely commodity prices) are in place for the WA market here to have some significant gains over the next couple of years. Keep in mind it is a different case over on the east coast. The market over there has slowed down – and I think it still has some slowing down to do.

 

WA is a mining state, and we’ve recorded strong iron ore price exports of $100 per tonne for the last six months, and based on WA treasury estimates, with every US$1 increase in the iron ore price, WA receives an extra $81 million.

 

The AUD exchange rate is helping as well, each time the Aussie dollar drops by just one US cent, WA’s royalty income is expected to jump by $101 million.

 

  1. Can you afford to upgrade without selling your current home?

Ideally, the choice to maintain your property and rent it out will still allow you to upgrade and afford the home you want. Sometimes by selling the property you could borrow an extra $100,000-$200,000… so maintaining your home and renting it out may reduce that capacity.

 

But you might find you can still afford the home of your dreams in that price point. It is a buyer’s market at the moment, which is great for upgraders because house prices have dropped far below home values – and this market will not last long. There are homes in the Perth hills that were previously worth $900,000+ now available for $650,000.

 

It’s a great time to see what’s around, and speak with your lender to see what you can afford. The cash rate is also at an historic low of 0.25%, so it’s an opportune time to get your finances in a position to upgrade, and secure some long-term capital growth.

 

  1. Is being a landlord for you?

If you find you can afford to keep your home as an investment property, consider whether you have the time, patience, and desire to manage your rental yourself, or if you’d like to hire a property manager to do it for you.

Some of the most important tasks of a landlord (or property manager) are:

  • Finding a reliable tenant that pays rent on time and maintains your property.
  • Collecting and lodging the correct tenancy bond with WA bond administration.
  • Conducting regular routine inspections on the property.
  • Organising prompt maintenance and/or repairs on the property.
  • Ensuring all legal paperwork and documentation are filled out correctly and signed (e.g. tenancy agreements, property condition reports, inspection reports, repair requests etc).

If you work full-time and have a family, you may find it difficult to give your tenant and rental the time and commitment it needs – it totally depends on your circumstances, and headspace.

 

And if you’d like a second opinion about whether to sell or rent your property in the current Perth market, feel free to call Brendan on 0439 998 867. He’d be more than happy to answer any questions you may have.

How To Prepare Your Home For Sale

Ready to sell your home, but not sure what to fix or tweak before listing it on the market?

Hear my top #3 recommendations to maximise the selling potential of your home, and help it stand out from the rest.

The great thing is, all of the jobs can be done for around $80 or less (and a quick trip to Bunnings)!

  1. Front gardens

 “My no. 1 tip for preparing your home is the garden – especially the front garden. It’s amazing how many buyers decide if they like your property by their first impression as they arrive.” – Wayne Adlem, Real Estate Agent for Southern River

When buyers view the street appeal of your property (whilst doing a drive by, or attending a home open), it subconsciously sets the standard for what to expect when they walk inside. So if they arrive at your home and see unkempt and/or dead lawns, and overgrown gardens, they’re going to assume the interior of the home is in the same condition.

What’s more, they will then actively look for these flaws once they are inside.

All it takes is a Sunday afternoon and a trailer of mulch for about $80. By simply weeding, mowing the lawn, and giving your garden beds some tender loving care, you can ensure buyers view your home in the best light long before they set foot inside. It’s both easy and cheap to do.

  1. Maintenance and repairs

“Fixing minor repairs before the first home open gives buyers less bargaining power when they make an offer.” – Wayne Adlem, Real Estate Agent for Southern River

Some common issues are:

  • Leaking taps
  • Broken exhaust fans
  • Door locks not working properly
  • Broken sprinkler heads in the garden

In this market, buyers generally want to move in straight away, and not have any minor maintenance to do. Give your home a quick once-over to address any niggling repairs and you’ll give your home the best chance of selling, quickly.

  1. De-clutter and de-personalise

At the home open, buyers will always look to see how much storage, linen and living space your home has. They want to be sure your home is the perfect size for their needs. So if you have rooms with boxes and clutter, or cupboards filled to the brim with clothes, toys, books, paperwork etc, it will give buyers the impression there isn’t enough space.

Spend a Saturday tidying your linen, storage cupboards, and kitchen and pantry space (if need be). Pack away excess bed linen, towels, clothes etc in a box and move to the garage or shed. You don’t need to pack up your life – just focus on items you don’t use regularly that take up a lot of room. You’ll be surprised at how much this simple de-cluttering will maximise the space of your home.

The last tip is to de-personalise your home.

Why?

Because buyers want to envision them and their family living in the space – not yours. Sentimental items like lots of family photos or kids names on bedroom doors can make it difficult for them to see themselves living there. It’s an easy thing to change, and it really does make a difference.

By doing these simple, cost-effective modifications to your home, you will make a massive difference to the selling potential of your property, and help your home stand out from the rest.

Thinking of listing your home on the market, but still have a few questions? I’d love to help you, feel free to call me on 0406 583 754 or send me an email at wayne@nakedrealestate.com.au