The greener grass is often the riskier one....

You're looking to move. Maybe downsize. Maybe a tree-change or sea-change. You've just started looking and suddenly you see it. Your new perfect house (your current place was also perfect when you bought it, but now is less than ideal). It has everything you could possibly want. But. It has to be sold right now. Perhaps the auction is in 3 days time. Perhaps there are a number of potential buyers lined up make offers. What do you do?

I have seen this scenario with a few clients. They are in the difficult position of wanting to buy a new property but have not sold their current property (and often haven't even put their current property on the market).

It is important to take a step back and consider the consequences of purchasing the new property without having sold your current one. The obvious and key risk is that you are unable to sell your property in time for the settlement of your purchase. This is a real possibility, especially in the context of a sluggish market. Speak to a number of local agents and get an idea of the clearance rate for your type of property in your local area.

If you decide to go ahead you need to consider what kind of amendments to the contracts (purchase and sale) you should request to minimise your financial exposure. A longer settlement on the purchase and a shorter settlement for the sale, for instance. Use of deposit bonds. Having the deposit on your purchase broken up into instalments payable when you exchange on your sale. Ultimately, the safest way to do it, is to make the purchase conditional upon the sale of your current property. The problem is that most vendors would not agree to a conditional contract. But if they are desperate to sell, you never know, they might just agree. You should fully investigate the likelihood of you obtaining bridging finance should you have to settle the purchase before your sale. This is a crucial backup.

At the end of the day, be wary of the lure of a new perfect property, when you don't know if you can sell the ex-perfect one.

Jonathan Marquet
Emil Ford Lawyers