by Carly Susic, Melbourne Buyers Advocate
Buying your second home? Moving up the property ladder and upsizing is an exciting time. But your property buying experience is limited, with just one prior purchase behind you, so there are plenty of pitfalls to avoid.
Today, I’ll be sharing my best advice if you’re buying your second home.
Most upsizers have growing families or growing needs
Typically you are outgrowing a smaller property or unit, and your family is getting bigger. If your kids are younger, you’re tired of your living space being overrun with toys. Or you want an extra living space for your teenagers.
And if you don’t have kids, you might want that extra space for hobbies. For example, we worked with clients who were a childless couple wanting more space for art and sewing. Now, one has a dedicated art room, the other has her own sewing room. (People with kids are envious reading this no doubt!)
Or perhaps your income has happily changed and you can now afford to upsize. No matter your situation for selling your first home and buying your second, read on for my expert tips.
Always sell before you buy
Always, always always! When you sell first, you know exactly what you have to spend when buying your second home.
If your first home sells for more than you expect, you have a nice surprise windfall and can purchase a better property.
However if you’re unlucky and your home sells for less than you expect, or fails to sell at all, you are at risk of having purchased a property that you suddenly can’t afford. This is a horrible situation to be in.
If you’ve already bought, you are then under huge pressure to sell quickly. When you are under pressure to buy you may end up panicking and buying the wrong home, or paying to much for a property because your settlement deadline is looming.
You may be able to arrange bridging finance but it’s known to be difficult to secure and is very expensive. I’m not a financial advisor, but I’d hate for you to be stuck in a bridging finance situation. So it’s always far better to sell before you buy.
What about selling and then you can’t find a home?
One common fear second home buyers have is selling their home first, and then rushing to purchase a home, worried that they’ll be homeless because they haven’t found their dream home.
Firstly, you can arrange a longer settlement, up to 120 days, to give yourself as much time as possible to find your second home. Secondly, while it may be stressful to think of moving twice, you are exposed to far less risk by renting for a few months or staying with your parents (or in-laws) until you find your dream home.
Being open to that possibility will reduce risk for you. It is far better and less riskier to break a lease on a rental than get stuck in the wrong home or holding two properties because you’ve bought your second home without selling your current home first.
How to find the right second home
Working with a buyers’ advocate can potentially speed up the home hunting process as they have access to agents with unlisted properties and can inspect properties on your behalf so you’re not wasting precious weekends looking at the wrong properties.
While you are preparing your home for sale, you can start inspecting properties, researching the market and preparing your wish-list. This means you’ll be ready to strike as soon as your home sells.
I’ve had many clients sell their home at auction in the morning and be bidding at an afternoon auction later that same day or the following week because they were prepared and ready to go.
When you upsize, think about your future needs
Many homebuyers forget that the little toddler at kindy will fast become a grunting teenager going to high school. So consider the home that will meet both your current and future needs. This may include being close to public transport, sports facilities, high street shops and high schools that your future teen will appreciate. Being able to walk to the shops, park or school is important at this age.
Many upsizers want to stay within their primary school zone, when it is often only a few years until high school hits. Think beyond primary school and consider high school options and whether there’s public transport access.
The typical second home wish list
It helps to be clear on what you want and what you can get from your wish list in your desired area. Most buyers are looking for:
- more space, especially a second living area
- more bathrooms and an ensuite to the master
- generally larger size
- more garden space (or sometimes less if you no longer need a trampoline or cubby house)
- a guest bedroom for interstate or overseas guests
Many second home buyers overlook work from home space
As we move into a hybrid working on a more permanent basis,many of us need a dedicated space to work from home a few days each week. And in the case of couples, many are both working, and therefore two work from home spaces are required. So consider your work from home needs when inspecting properties. If you work from home often, don’t imagine you’ll enjoy working from a busy kitchen or cramped corner of the bedroom. Choose a larger home that has the space to accommodate you—it could be the place you spend most of your time in, so it should meet your requirements.
Consider location
Some buyers are moving closer to the central suburbs for better accessibility, whereas others want to move further out, where the budget will go much further. I had clients living in Armadale with three young boys. They would’ve loved to stay in their weatherboard cottage but they were struggling with space, and so they moved further out to Ashburton where they were able to secure a large family home that is perfect for their now-teenage sons. By going out to a few more suburbs they were able to get much more space for their budget.
However, think of your lifestyle. If you love the inner-city life of cafes and trams into the CBD, don’t go so far out that you sacrifice your perfect weekends. You will be living in your second home for many years so you want to enjoy it as much as you can. You may consider sacrificing space and securing a more affordable townhouse in the right location rather than having a perfect house in a suburb you don’t enjoy.
Plan accordingly
It’s likely that selling your first home and buying your second will take the better part of a year.
So if you want to be in by Christmas, think about how long it may take. It can take a few months to prepare your home for sale. Then you’ll need to find an agent. The sales campaign will typically take four weeks. And if your home fails to to sell at auction, it could be on the market for a few weeks after.
Following this, you need to find a home to purchase and meet your settlement day commitments. The industry shuts down over summer holidays, and even Easter, winter and spring holidays so consider the timing of your settlement to allow you plenty of time to find your second home.
To recap: selling your first home and buying your second
- always sell your first home before you buy your second, or you may risk financial difficulty
- consider your location and be willing to move out (or in) a few suburbs to meet your wish list
- but don’t sacrifice your lifestyle just to get more space \
- consider your work from home requirements
- if you have younger kids, plan for their access to high school and life as teenagers
- plan the timing of selling and buying so you don’t miss holiday periods where it will be difficult to find a home to buy
- consider a buyers advocate to help you manage (we can help plan the entire process from the sale of the first home to the purchase of the second)
Contact us for assistance
As buyers’ advocates we can help you when selling your first home and buying your second and help you make the best possible investment for your lifestyle, health and financial situation. Contact us for a no-obligation consultation.
