Can You Make An Offer On A House Before Selling Yours?

Coordinating selling your current property and buying a new property can be very stressful and confusing. It can be a juggling act trying to work out the best time to sell your property as well as finding and making an offer on a new one, also being part of the dreaded property chain.

So, can you put an offer on a house without selling yours first?

Yes, you can make an offer on a house before selling yours. Estate agents have to pass on all offers to the seller of the property they represent, however, they can also make recommendations on which buyer to choose so taking steps such as putting your house on the market can help.

In this post, I’ll run through ways to increase the confidence of the property seller to help improve your chances of getting an offer accepted on a house before selling yours. Also, how you can buy a house without selling yours first as well as the benefits of accepting an offer or selling your your property first.

Making An Offer On A House Before Selling Yours

In an ideal world, you would be able to sell your property the minute it is put on the market and the transaction would take seconds, much like a credit card transaction. Unfortunately, selling your current house can take months which includes finding a buyer and going through the legal sale process.

This is why if you make an offer before selling your house it can raise concerns for the seller that there could be unwanted delays preventing them from moving into their next property or even running the risk that they lose out on the new property altogether if their seller pulls out.

Therefore the more you can increase the confidence of the seller the better position you will put yourself in to have your offer accepted. Here are some ways you can increase the confidence of the seller.

• Putting your house on the market. If the seller knows that your house is on the market it will demonstrate that you are serious about moving and have already put the wheels in motion. Even if your house is going on the market in a few days’ time, it’s worth making the seller aware.

• Getting a mortgage in principle. Sometimes referred to as a decision in principle (DIP) or an agreement in principle (AIP), this is a statement from a mortgage lender that they will let you borrow the amount of money you need to buy the property. This can be useful to submit with your offer to show you can afford the money and can get it from a lender. Some estate agents and property sellers will insist that you at least have a mortgage in principle to make an offer in the first place.

• Making a generous offer. If a seller receives two offers that are the same, they will differentiate them based on other benefits such as how fast the buyer can purchase the property and the perceived likelihood the sale will fall through. This is why cash buyers can sometimes even have their offer accepted with a lower offer as there is more certainty they can close the sale. Making a generous offer can help differentiate you from other potential buyers.

Viewing Houses Before Yours Is On The Market

Viewing houses before yours is on the market can be a great way to explore what’s available and can help you understand whether you even want to move in the first place.

However, the danger of viewing properties before you are ready to sell your current property is that if you do find that perfect home you may struggle to put forward a credible offer as you haven’t started the process of selling your current property.

If you are wanting to view houses before yours is on the market there are a few things that can help you prepare, especially with understanding what budget you have available so you aren’t wasting time looking at the wrong properties.

Getting a mortgage in principle can help you understand what a mortgage lender is willing to let you borrow. Also having your home valued in advance of any property viewings can help you understand what price you are likely to get and how much equity you have built up that you can use to fund your next property purchase.

Adding together the amount you can borrow from a mortgage lender with the equity you have in your current property, plus any additional savings can give you an idea of the maximum budget you have available to buy your next property.

Obviously, you may not want to go to the maximum you can afford, however, knowing how much money you have available is great to know before you start viewing houses.

If you do then find a new property, these documents also have the added benefit of showing the seller that you’re serious, so if you do make an offer it looks more credible.

Can You Buy A House Without Selling Yours First?

Yes, you can buy a house without selling yours first. If your offer is accepted before you’ve had chance to sell your property, or even if you don’t want to sell, it’s still possible to go ahead with the purchase. However, even though it’s possible, it does come with more risk as you’ll be taking on more debt.

Unfortunately most people don’t have enough spare cash lying around to be able to make the next property purchase in cash, so what that means is getting an another mortgage on top of the current one.

• Rent out your current property. If you don’t want to sell your current property, if you rent it out instead you can use the income it generates to increase your affordability for the new mortgage. However, if you have a residential mortgage, you may be able to rent it out for a year with permission from your mortgage lender, or switch to a buy to let mortgage. I’ve written a more in-depth post about renting out your property with a residential mortgage that you may find useful.

• Qualify for a second mortgage with your current level of income. Depending on your current income levels and how much you want to borrow, you may be able to qualify for two mortgages. This is especially true for people that are either downsizing or have built up a lot of equity in the first property so have a low amount of borrowing.

• Sell your property quickly. Depending on the demand for your property, you may be able to sell your house quickly to fund the new property purchase. If you’re buying the new property with a mortgage, this can take 4 to 6 weeks or even longer if there is a chain. If you find a cash buyer that can act quickly, you may even be able to sell yours first. However, to sell your house quickly there is a risk you won’t get the price that it’s worth.

• Getting a bridging loan. These are short term loans which can serve the purose of bridging the gap between buying a new house and selling your current one. These do come with some quite high interest rates so make sure you’re careful and seek the help of a mortgage advisor if you want to go down this route.

Benefits of Selling Your House Before Buying A New One

There are many benefits to selling your house before buying a new one, from not having to rush the sale of your current property helping you maximise the sale price to putting you in a better noegotiating position with the seller of the new property as you aren’t part of a chain.

Here are some of the benefit of selling your house before buying a new one.

• Able to view any property. Some estate agents and property sellers will insist that you are at least on the final stage of selling your property before you are able to make an offer or sometimes even view a property to avoid wasting their time.

• Better negotiating position. By selling your property already you don’t have to rely on selling yours to make the purchase so there’s fewer things that can go wrong or delay the process which can be appealing to the seller.

• More accurately able to budget for your next property. If you’ve already sold your property, you know exactly how much money you have available for your next property and aren’t hoping to sell yours for a specific figure.

• Don’t have to rush into anything. If you’ve already sold your house and are either renting or living with friends and family you’ve got time to properly research the market and find your perfect property.

• Don’t have to rush your property sale. If you don’t have to sell your property within a specific time period, you can take your time and take offers over a long time horizon, hopefully resulting in a higher price.

Many of these benefits are also able to be realised by having an offer accepted on your property before making an offer on a new one and can put you in a better negotiating position.

However, there are also some disadvantages of selling your home before buying your next property, inculding:

• Finding alternative accommodation, which can be hard with a lot of landlords wanting minimum tenancy periods.
• A lot of disruption moving twice, once into the temporary accommodation, then again into the new property.

Can You Reserve A House Before Selling Yours?

For those people buying new build properties, knowing whether you can reserve a new house before selling yours can be useful.

Most major builders will want you to exchange within 28 days of reservation. In order to exchange you will need to put down a deposit, usually 10% of the property value, which you may not be able to do without selling your current property to finance the new one.

A developer isn’t going to let you reserve the house if you can’t finance the purchase or deposit. Some developers may offer you support in selling your current property, such as offering to do a part-exchange where they will buy your property or offer you a deal where when you reserve you get a short window of time to sell your property and if you don’t they will refund the reservation deposit.

If you are considering going down the part-exchange route, whilst this may make the process significantly easier as you don’t have to find a buyer, just make sure you’re getting a good price for your house.

Summary – Can You Make An Offer On A House Before Selling Yours?

Overall, yes you can put an offer on a house without selling yours first, however, the seller may not wish to accept your offer due to the risk of delay or the purchase falling through if you aren’t able to sell your property quickly.

This is why it’s important to give confidence to the seller that you’re in a position to proceed with the purchase. This can include getting a mortgage in principle and ensuring your property is on the market, or about to be put on the market.

I hope this post has been useful. If you do have any questions, speaking to a mortgage broker or estate agent can help you get advice specific to your circumstances. Good luck with your property purchase!